📑 Form T123 – Election on Disposition of Canadian Securities

Form T123, “Election on Disposition of Canadian Securities,” is a Canada Revenue Agency (CRA) tax form that allows taxpayers to elect that certain securities they dispose of be treated as capital property rather than as inventory disposed in the normal course of business or other income. This election affects how gains or losses are reported on your tax return.

📌 Purpose of the Election

Normally, when you dispose of Canadian securities (such as shares), gains or losses might be treated as income in the year of disposition. By making the election with Form T123, you instruct CRA to treat all eligible Canadian securities you owned in that tax year as capital property. The result is that gains or losses will be reported as capital gains or capital losses, usually more favourable for many taxpayers.

📥 How to Get the Form

  • Download the accessible fillable PDF (t123-fill-15e.pdf) and open it with Acrobat Reader 10 or later.
  • Print the standard PDF version and fill it out by hand if preferred.
  • Alternate formats (audio, braille, large print) are available on request.

📅 When to File

Attach a completed T123 form to your income tax and benefit return for the year in which you disposed of the Canadian securities. Once you make this election for a particular tax year, it applies to all Canadian securities you owned that year and cannot be reversed later.

📊 Impact on Capital Gains Reporting

If the election is accepted, disposals of the selected securities are subject to capital gains or capital losses reporting rules on Schedule 3 of your T1 return, rather than ordinary income treatment. Some taxpayers prefer this because only 50 % of a capital gain is included in taxable income, whereas other income may be fully taxable.

📌 Important Notes

  • Once elected for a tax year, you generally cannot revoke the election.
  • Certain taxpayers such as dealers in securities or non-residents might not be eligible to make this election under CRA rules.
  • Consult the CRA Guide T4037 (Capital Gains) or a tax professional for detailed consequences and examples.

Official CRA form and download links are available here: Form T123 – Election on Disposition of Canadian Securities .