Business Expenses - Capital Gains Tax

This FAQ article is based on tax law for the year ending 29 February 2024.


If a company has several income streams and one being Capital Gain. is it correct that 20% of that income is exempt and one can claim business expenses against the 80% that is taxable?


From the facts provided, I understand that a company has income, as defined in the Income Tax Act (ITA), from different sources.

The company had an aggregate capital gain to which the inclusion rate of 80% is applied to determine the amount to be included in the company's taxable income.

If I understand correctly, your question is whether business expenses are deductible against the capital gain income included in the company's taxable income.

The tax calculation framework will assist to explain the answer:

As per the tax calculation framework, you claim all your allowable deductions and capital allowances against income as defined. Then you add your taxable portion of the capital gains. Thereafter you deduct the allowable donations to calculate the company's taxable income.


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