Blast from the Past - 1994 capital gain exemption

Uncategorized Sep 25, 2019

Recently our office has dealt with several estates where the deceased had purchased property prior to 1994. The property included cottages, artwork, rental properties and business. 

Back in 1994 the government eliminated the general lifetime exemption of $100,000.00 on all capital assets. To make up for the elimination, and to make sure anyone who had property and didn't sell it would still get this benefit, the Revenue Canada (now called the CRA) allowed a one time election (using form T664) that permitted taxpayers to "bump-up" the tax cost of the property by a maximum of $100,000.00. The election made sure that future liabilities would be minimilized.In many estates, the executor cannot find the filed election, or even know if the election was filed. 

If you still own property that you made an election on in 1994, make sure that you have a copy of your 194 return available, and that the executors of your estate are aware of it. This is important to ensure that the tax planning you did back in 1994 will be effective. 

If you don't have a copy of your 1994 return, you can request a copy by calling the CRA at 1-800-959-8281. Ensure that you specifically ask for Form T664 from 1994 so that they don't just send you the summary. When calling you should have a copy of your most recent tax return available so CRA can verify your identity. 

Since there are many considerations when disposing of property that has been held since before 1994 we recommend that you speak with an accountant to reduce your risk of over-paying income tax. If you need help handling capital gains call our experienced probate lawyers today. We are here to help!

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