Remember to use your capital gains election

The February 22, 1994 federal budget eliminated the $100,000 Capital Gains Deduction, and many Canadians made elections to report the accrued value in their taxable assets on their 1994 tax returns, to take advantage of the deduction.

It’s important to know that this election can significantly reduce your taxes whenever you sell an asset on which the election was made. In many cases, the 1994 elected value will be used as the new cost base of the asset, rather than what you actually paid for it. This can make a big difference to those who sold shares, or other assets during the tax year.

A special calculation must be made for those who made an election on mutual funds. Ask your tax preparer to help you with the “exempt gains balance” which would have been set up at the time of the election.

Because your assets are considered to be disposed of upon death, it is also most important to ensure that your executor has a copy of your 1994 capital gains election. That way, your estate will pay fewer tax dollars.