The Canada Revenue Agency (CRA) identified another issue causing incorrect assessments of some T1 tax returns claiming the lifetime capital gains exemption (LCGE), and the agency says it will reassess the affected returns beginning Tuesday.
In a LinkedIn post on Monday, Ryan Minor, director of tax with CPA Canada, shared communication from the CRA regarding a second issue with the calculation of the capital gains deduction.
“The issue that led to incorrect calculations … was resolved on May 22,” the CRA told CPA Canada, as shared in Minor’s post. The CRA will “proactively reassess the affected returns” beginning June 10.
In the LinkedIn post, Minor said “several” tax practitioners had informed CPA Canada that clients were receiving incorrect LCGE assessments on returns filed after April 21. On that date, the CRA had resolved one unspecified issue with the calculation of the capital gains deduction, discovered in early April 2025, as the agency confirmed in May. The CRA said it would proactively reassess those affected returns, and no action was required on the part of affected taxpayers.
Now, the agency will do the same for returns affected by the second issue.
As with the first issue, the CRA provided no specifics. “The good news is that it’s being fixed,” CPA Canada said in an email.
The LCGE, available for gains on the sale of small business shares and farming and fishing property, increased to $1.25 million from $1,016,846, effective June 25, 2024 — the date the now-defunct proposed increase to the capital gains inclusion rate was originally slated to take effect. (The CRA is administering the increased LCGE, although the measure still requires legislation.)
T1 and T3 schedules maintained the reporting of capital gains before and after June 25 of last year in line with the proposed increase to the capital gains inclusion rate, which was a complicating factor this tax-filing season.
In addition to incorrect assessments related to the LCGE, tax practitioners this tax-filing season dealt with missing tax slips or duplicate tax slips showing up in CRA portals, following changes to the electronic filing system used to upload slips. The challenge extended to TFSA annual information slips.
CRA statistics to June 2 indicate assessments have been conducted on about 30 million T1 returns for the 2024 tax year.