Disposing of your shares of, or interest in, a flow-through entity
When you dispose of your shares of, or interest in, a flow-through entity, calculate the capital gain or loss in the same way as with any other disposition of capital property (proceeds of disposition minus the adjusted cost base (ACB) and outlays and expenses for the sale).
Completing Schedule 3
Report these dispositions on Schedule 3 as follows:
- for shares of a flow-through entity, use the Publicly traded shares, mutual fund units, deferral of eligible small business corporation shares, and other shares section
- for an interest in a flow-through entity, use the Bonds, debentures, promissory notes, crypto-assets, and other similar properties section
If you filed Form T664 for your shares of, or interest in, a flow-through entity and the proceeds of disposition were more than the fair market value, the ACB of your investments may be affected. For more information, see Property for which you filed Form T664 or T664 (Seniors).
Certain circumstances may create a special situation for a flow-through entity described in items 1 to 6 of What is a flow-through entity?. This happens if you dispose of your remaining shares of, or interest in, such an entity in the 1994 to 2023 tax years and have filed Form T664. If this is the case, in the year you dispose of the shares, use the exempt capital gains balance (ECGB) available for the entity immediately before the disposition to increase the ACB of the shares or interest.
The ACB adjustment will either reduce your capital gain or will create or increase your capital loss from disposing of the shares or interest in the flow-through entity.
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