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T2 Schedule 6 and the Capital Gains Inclusion Rate

Updated: 2025-01-31

In the 2024 federal budget, the Department of Finance announced an increase to the capital gains inclusion rate from one half (1/2) to two thirds (2/3) for capital gains realized after June 24, 2024. This increase applies to all types of corporations. However, an individual, a graduated rate estate (GRE) or a qualified disability trust (QDT) are eligible to have a reduced inclusion rate applied to their capital gains under the $250,000 threshold from the basic inclusion rate of two thirds to one half.

As of the date of writing this documentation, the increased inclusion rate has been deferred to January 1, 2026. Please read Deferral in Implementation of Change to Capital Gains Inclusion Rate for the most up-to-date information on the proposed changes to the capital gains inclusion rate. See also the CDA and the Capital Gains Inclusion Rate help topic.

Applying the 2/3 Inclusion Rate

When you create a new T2 return, or open or carry forward an existing T2 return, TaxCycle continues to calculate capital gains using the 1/2 inclusion rate. If a corporation’s tax year includes June 25, 2024, (for example, January 1, 2024, to December 31, 2024) and there are dispositions after June 24, 2024, the new inclusion rate of 2/3 applies. If the corporation’s tax year starts after June 24, 2024, the new inclusion rate of 2/3 also applies.

To apply the new 2/3 capital gains inclusion rate in TaxCycle T2:

  1. Go to the TaxConstants worksheet.
  2. In the Summary of Dispositions of Capital Property - S6 section, check the box to apply the new 2/3 capital gains inclusion rate.
    Screen Capture: TaxConstants worksheet
  3. Open Schedule 6 (S6) and enter the disposition details.
  4. Check the box in the “After June 24, 2024” column to indicate that a disposition relates to a period after June 24, 2024, and thus subject to the 2/3 capital gain inclusion rate. Do not check this box if a corporation’s tax year ends before June 25, 2024, or if a corporation’s tax year begins after June 24, 2024. Screen Capture: S6 Part 1 table
  5. If applicable, enter the capital gains dividends received in the applicable fields related to the correct periods in Part 8 of the Schedule 6.
    Screen Capture: Part 8 of the S6
  6. When you complete Part 1 of the Schedule 13, TaxCycle automatically calculates the portion of the capital gains reserves taken into income based on the tax year start date of the corporation as indicated in Note 6 in the Notes section of the S6.Screen Capture: Complete Part 1 of the S13
  7. The capital gains inclusion rate is calculated as amount M in Part 9 of Schedule 6. If a corporation’s taxation year ends before June 25, 2024, (“Period 1”), the capital gains inclusion rate is 1/2. If the taxation year begins after June 24, 2024, (“Period 2”), the capital gains inclusion rate is 2/3. If the taxation year begins before June 25, 2024, and ends after June 24, 2024, (“Straddle year”), a special rule applies and the inclusion rate may range anywhere from 1/2 to 1/3 (i.e., 0.5876). In this case, a weighted average rate is calculated based on the capital gains (losses) from Period 1 and Period 2. Refer to amounts M1, M2, M3 and M4 in Part 9 of the S6 as well as Note 7 in the Notes section of the S6.