Taxpayers with capital gains in 2024 who claimed the lifetime capital gains exemption and were incorrectly assessed won’t need to file an objection or T1 adjustment request with the Canada Revenue Agency (CRA).
In a LinkedIn post on Friday, Ryan Minor, director of tax with CPA Canada, shared communication from the CRA saying the agency would proactively reassess affected taxpayers.
The CRA said “an issue” with the calculation of the capital gains deduction, discovered in early April 2025, was resolved on April 21.
“Any return filed after April 21 was not affected by this issue,” the CRA communication said. “For taxpayers who have already filed, the CRA will be taking corrective action on a priority basis. There is no action required on the part of affected taxpayers.”
Once corrections are made, affected taxpayers will receive a notice of reassessment, the CRA said.
The agency didn’t confirm what the issue was.
“The good news is they’re looking into it, and they want to deal with it proactively without the involvement of the taxpayer,” Minor said in an interview.
In his LinkedIn post, Minor said “many” tax practitioners told him taxpayers who claimed the lifetime capital gains exemption (LCGE) for the 2024 tax year had been assessed with an incorrect maximum LCGE amount. A few tax practitioners responded to Minor’s post to say some returns filed after April 21 were still incorrectly assessed.
“It is possible there is more than one issue that’s causing these capital gains exemption assessments to be incorrect,” Minor said in the interview. CPA Canada is “digging into all the causes” with the CRA, he said. “At the end of the day, we want to get them to reassess everybody for the proper amount.”
Minor also said the incorrect assessments appear to relate to dispositions throughout 2024, not just those occurring on or after June 25, 2024, as initially reported. June 25 is the date the now-defunct proposed increase to the capital gains inclusion rate was originally slated to take effect.
The government is proceeding with the proposed increase to the LCGE, effective June 25 of last year, although the measure still requires legislation. 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.
T1 taxpayers with capital gains to report (including capital gains on T3 tax slips) have until June 2 to file their returns — an extension announced on Jan. 31 when the Finance Department deferred the proposed increase to the capital gains inclusion rate, which the Liberals dropped during the election campaign.
CRA statistics to May 20 indicate assessments have been conducted on about 29 million tax returns for individuals for the 2024 tax year.