8-4. The capital gains taxation that became effective January 1, 1972, represented a compro- mise between the view that capital gains should be exempt from tax and the position that such freedom from taxation creates serious inequities among various classes of taxpayers. Taxation of capital gains was introduced, but on a basis that was very favourable to the taxpayer. 8-7. As a result of such criticism, a variety of limitations were introduced over subsequent years. Without going through a detailed history of these changes, we would note that, as of 2020, a deduction is available for the taxable part of an $883,384 capital gain resulting from the disposition of shares of a qualified small business corporation. Even more attractive is the avail- ability of a deduction for the taxable component of a $1,000,000 capital gain on the disposition of a qualified farming or fishing property. 8-12. Capital gains and losses are the third major component of Net Income For Tax Purposes. This subject is covered in Subdivision c of Division B, Sections 38 through 55. Sections 38 and 39 define taxable capital gains, allowable capital losses, and other items that relate to the calcu- lation of these amounts. Section 40 provides the general tax rules for computing these amounts. The remaining Sections 41 through 55 deal with more specific matters, such as identical proper- ties (Section 47), adjustments to the cost base (Section 53), and various additional definitions (Section 54). 8-4. The capital gains taxation that became effective January 1, 1972, represented a compro- mise between the view that capital gains should be exempt from tax and the position that such freedom from taxation creates serious inequities among various classes of taxpayers. Taxation of capital gains was introduced, but on a basis that was very favourable to the taxpayer. 8-7. As a result of such criticism, a variety of limitations were introduced over subsequent years. Without going through a detailed history of these changes, we would note that, as of 2020, a deduction is available for the taxable part of an $883,384 capital gain resulting from the disposition of shares of a qualified small business corporation. Even more attractive is the avail- ability of a deduction for the taxable component of a $1,000,000 capital gain on the disposition of a qualified farming or fishing property. 8-12. Capital gains and losses are the third major component of Net Income For Tax Purposes. This subject is covered in Subdivision c of Division B, Sections 38 through 55. Sections 38 and 39 define taxable capital gains, allowable capital losses, and other items that relate to the calcu- lation of these amounts. Section 40 provides the general tax rules for computing these amounts. The remaining Sections 41 through 55 deal with more specific matters, such as identical proper- ties (Section 47), adjustments to the cost base (Section 53), and various additional definitions (Section 54)
