How to Complete Form T664: Capital Gain Election on Property

What Is Form T664?

Quick tip: download the official T664 first, then fill it while following this guide: Download T664 form (official CRA).

Form T664 — Election to Report a Capital Gain on Property Owned at End of February 22, 1994 is a historical CRA form that was used by Canadian taxpayers to take advantage of a one-time capital gains exemption that was eliminated in the 1994 federal budget. While you can no longer file a new T664 election, understanding this form is important for newcomers who may encounter its effects when dealing with Canadian property, investments, or inherited assets.

The Historical Context: The 1994 Capital Gains Exemption

Prior to February 22, 1994, Canadian taxpayers could claim a lifetime $100,000 capital gains exemption on most types of capital property (excluding principal residences, which have their own separate exemption). This meant that the first $100,000 of capital gains you earned over your lifetime were tax-free.

In the February 22, 1994 federal budget, the government announced the elimination of this $100,000 lifetime capital gains exemption. However, to be fair to taxpayers who had unrealized gains on properties they owned at that time, the government allowed taxpayers to file a T664 election to "crystallize" their accrued capital gains up to February 22, 1994.

What "Crystallizing" Means

By filing the T664, taxpayers could elect to report a capital gain on property they owned on February 22, 1994, even though they hadn't actually sold the property. This allowed them to use up their remaining $100,000 lifetime capital gains exemption on paper, effectively increasing the adjusted cost base (ACB) of their property. The higher ACB would then reduce the taxable capital gain when the property was eventually sold.

Why Does This Matter to Newcomers Today?

Even though the T664 deadline passed decades ago, its effects are still very much alive. Here's why it matters to newcomers:

1. Purchasing Property with a T664 Election

If you purchase a property (real estate, investments, or a business) from a Canadian who filed a T664 election on that property, the seller's adjusted cost base will reflect the elected amount. This affects how the capital gain is calculated when the property was sold to you, and it may be referenced in the property's tax history.

2. Inheriting Assets

If you inherit assets from a Canadian family member or through an estate, and the deceased had filed a T664 election on those assets, the adjusted cost base of those assets will reflect the election. Understanding this is important for calculating any capital gains when you eventually dispose of the inherited property.

3. Spousal or Family Transfers

If your Canadian spouse or family member transfers property to you, and they had filed a T664 election on that property, the adjusted cost base carries forward. You need to know the elected value to properly calculate your own capital gains or losses when you eventually sell.

Understanding the T664 Form

While you cannot file a new T664, understanding its structure helps you interpret the tax implications of any property affected by a past election:

Part 1: Property Identification

• Type of property (real estate, shares, mutual funds, etc.)
• Description of the property
• Number of units or shares (if applicable)

Part 2: Elected Amount

• Fair market value (FMV) on February 22, 1994: What the property was worth on that date
• Adjusted cost base (ACB): The original cost of the property plus any eligible additions
• Elected proceeds of disposition: The amount the taxpayer elected to "sell" the property for on paper — this could be any amount between the ACB and the FMV, up to the remaining lifetime exemption

Part 3: Capital Gain Calculation

• The elected capital gain (elected proceeds minus ACB)
• The amount of the $100,000 lifetime exemption used
• The new adjusted cost base going forward (which equals the elected proceeds)

How the T664 Election Affects Current Capital Gains

Here's a practical example to illustrate:

Scenario: Your spouse purchased shares in a Canadian company in 1990 for $50,000. On February 22, 1994, those shares were worth $120,000. Your spouse filed a T664 election and elected proceeds of $150,000 (limited to the FMV of $120,000 in most cases — the exact rules are complex).

• Original ACB: $50,000
• Elected amount (new ACB): $120,000
• Capital gain reported in 1994: $70,000 (sheltered by the lifetime exemption)

Now, if your spouse sells those shares today for $300,000:

• Capital gain without election: $300,000 - $50,000 = $250,000
• Capital gain with election: $300,000 - $120,000 = $180,000
• Tax savings: The election saved $70,000 in taxable capital gains

What If There Was an Error in a Past T664 Filing?

If you discover that a T664 election was filed incorrectly, the CRA may allow amendments in certain circumstances. Common issues include:

• Incorrect fair market value on February 22, 1994
• Elected amount exceeding the actual FMV
• Mathematical errors in the capital gain calculation

Contact the CRA at 1-800-959-8281 to discuss any concerns about a past T664 filing.

Tips for Newcomers Dealing with T664-Related Assets

• Ask about historical elections: If you're buying property from a Canadian seller, ask whether a T664 election was filed on the property. This can affect the property's tax history.
• Get professional advice: If you've inherited or received assets that were subject to a T664 election, consult a Canadian tax accountant to understand the impact on your adjusted cost base and future capital gains.
• Keep records: If you acquire property that was subject to a T664 election, keep a copy of the election (or at least a record of the elected amount) with your tax files.
• Understand the capital gains inclusion rate: In Canada, only a portion of capital gains are taxable. The inclusion rate has changed over the years. For the 2025 tax year, the first $250,000 of capital gains is included at 50%, and amounts above that at 66.67% for individuals. Always check the current rate.

Related Tax Concepts for Newcomers

Principal Residence Exemption

Separate from the T664, the principal residence exemption allows you to shelter capital gains on your primary home from tax. This is one of the most valuable tax benefits in Canada and applies to all Canadian tax residents.

Lifetime Capital Gains Exemption (LCGE) for Small Business

While the $100,000 general lifetime exemption was eliminated in 1994, a Lifetime Capital Gains Exemption still exists for:

• Qualified small business corporation shares (currently up to approximately $1,016,836)
• Qualified farm and fishing property

If you're a newcomer who starts or buys a small business in Canada, this exemption could be very valuable when you eventually sell.

Additional Resources

• CRA Capital Gains guide (T4037): canada.ca/T4037
• CRA Adjusted Cost Base information: canada.ca/capital-gains
• CRA phone: 1-800-959-8281

Final Thoughts

While the T664 is a historical form that can no longer be filed, its legacy continues to affect Canadian property and investment transactions. As a newcomer, you're unlikely to encounter the T664 directly, but understanding its purpose helps you navigate situations where assets you acquire — whether through purchase, inheritance, or family transfer — have been affected by a past election. When in doubt, consult a tax professional who can help you understand the adjusted cost base of any property you acquire and ensure you calculate your capital gains correctly. Knowledge of Canada's tax history, even the parts that seem outdated, can save you real money in the present.

Download This Form

Before you submit anything, download the latest official file here: Download T664 form (official CRA). Always use the latest version.

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Navigating Capital Gains and Property as a Newcomer

Newcomers to Canada face a unique set of considerations when it comes to property and capital gains. While the core principles of capital gains taxation apply to all residents, understanding how your residency status impacts your tax obligations from day one is crucial. When you become a tax resident of Canada, you are generally deemed to have acquired most of your property (including foreign property) at its fair market value on the day you arrive. This "deemed acquisition" establishes your cost base for Canadian tax purposes, and any capital gain or loss is calculated from this new cost base when you eventually sell the property. This is a critical distinction, especially if you owned property before immigrating. It's also important to understand the principal residence exemption. While this exemption can significantly reduce or eliminate capital gains on the sale of your primary home, the rules can be complex for those who have lived in Canada for only part of the year or who previously owned a principal residence outside of Canada. Keeping meticulous records of your property's value upon arrival and any subsequent improvements is vital. For a comprehensive overview of Canadian tax obligations, consult our Tax Guide. You can also add tax-related tasks to your Settlement Checklist to ensure you don't miss any critical steps. Understanding these initial steps can prevent future complications, particularly when dealing with elections like Form T664. For more details on residency rules, refer to the Canada Revenue Agency's guide on determining your residency status.

When Professional Tax Advice Becomes Essential

While WelcomeAide provides valuable resources to help you understand complex tax topics, including capital gains and forms like T664, there are specific situations where engaging a qualified tax professional is not just helpful but essential. Capital gain elections, especially those involving property or international assets, can have significant and long-lasting financial implications if not handled correctly. Newcomers, in particular, often benefit from expert guidance due to the intricacies of cross-border tax implications, varying provincial tax laws, and the timing of residency changes. Consider seeking professional advice if: * You are dealing with a substantial property sale or a significant capital gain. * You have owned property in multiple countries or sold property shortly after arriving in Canada. * Your residency status is complex or has changed recently. * You are unsure about the fair market value of your property upon becoming a Canadian resident. * You are considering making an election like Form T664 and want to understand all potential outcomes. A tax professional can provide personalized advice, ensure compliance with all CRA regulations, and help optimize your tax position. While our AI Navigator can answer general questions and point you to relevant resources, it cannot replace the tailored expertise of a certified accountant or tax lawyer. For general information on the principal residence exemption, which often relates to property sales, you can visit the CRA's official page on the principal residence

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. Investing in professional advice can save you time, stress, and potential penalties in the long run, ensuring your financial journey in Canada starts on solid ground.