Use of T4 box 38 in the "Capital Gains" tab

[Taxpayer2023]

Hello!

 

Does anyone know why we enter the T4 box 38 amount in the Capital Gains tabs under the "Stock option benefits included as employment income (T4 box 38)" field? I see the provided explanation which states "Enter the stock option benefits realized with the disposition of employee stock option shares. This amount should be entered to avoid double taxation on the benefits already included as employment income from the T4 slip or as a disposition of deferred stock option shares." However, this still does not make sense. I know for a fact that you should not enter the total amount of box 38 in each of your Capital Gains tabs as this would end up adding up as excessive loss on your Schedule 3. I was told by UFile support to include box 38 amount in only one of your stock option tabs. 

 

I am also not sure I understand 2 other fields on the Capital Gains tab:

 

"Your percentage share of capital gain/loss recorded here" and "Capital gain taxable at 100% inclusion rate (under ITA sub-section 100(1))"

 

Thank you for your help!

[Geo123]

Hello Taxpayer2023,

1. On the "Left-side menu of the Interview tab", select "T4 and employment income".
2. On the screen to your right, choose between "T4 income earned outside Quebec" and "T4 and RL-1 (Relevé 1) income earned in Québec" depending on your province of residence.
3. Please note that the benefit on "Stock Option Benefit" in box 38 of the T4 is included in box 14. You will find box 38 in the middle of the page.
4. The boxes for "Security option deduction" that are entered in box 39 or 41 can be found in the drop-down list located at the bottom of the line "Other Information" (click on the triangle to see the list of choices)". Make your choice based on the box on your T4. In the field preceded by the sign "$", enter the amount on your T4.

At the far right of the screen, there is an icon of the plus sign "+". By clicking on this icon, another line is generated to enter additional information, if necessary.
For more information, please visit the following link:
For the CRA:
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/financial/security-options.html
We recommend that you carefully read each topic of this link.
For Revenu Québec :
https://www.revenuquebec.ca/en/citizens/income-tax-return/completing-your-income-tax-return/completing-your-income-tax-return/line-by-line-help/276-to-297-taxable-income/line-297/point-2/

 NOTE is Capital Gain when sell / security option deduction
>> t4 box 38
Use on Capital Gain entry ONLY if benefit not included on T4 Box 38 **

[Taxpayer2023]

Thank you for your reply Geo123. However, your reply seems to simply indicate how to enter the information from T4 box 38, 39 and 41 in the UFile T4 tab. My question is rather to try to understand why we enter box 38 information on the Capital Gain tab. What does it do?

I see the last part of your reply but I don't understand what you mean by:

 NOTE is Capital Gain when sell / security option deduction
>> t4 box 38
Use on Capital Gain entry ONLY if benefit not included on T4 Box 38 **

[Geo123]

Hello Taxpayer2023,

You are welcome.  For additional details or clarifications please contact the CRA at 1-800-959-8281

CRA

https://www.canada.ca/en/revenue-agency/corporate/contact-information.html

[Taxpayer2023]

Hello Geo123,

I did and they were not able to see why box 38 was entered in a Capital Gain tab in Ufile. They referred me back to UFile support since this is a question regarding the UFile interface. Thank you for your help in explaining this

[Geo123]

Hello Taxpayer2023

Please see previous :

>> t4 box 38
Use on Capital Gain entry ONLY if benefit not included on T4 Box 38 **

[j.m]

This field also messed me up and it makes no sense to me.

 

Once I finish my 2023 return, I need to go back and correct my 2022 return. In 2022. In 2022 I verified all my T4 boxes just to make sure I understood what was reported where. My T4 box 38 value is included in in box 14 so I figured I should enter the box 38 value into ufile "stock option benefits included as employment income".

Well that was a mistake. As I'm doing my 2023 taxes now, I see a huge capital loss carried forward from last year.

So in my case, I have to leave the field "Stock option benefits included as employment income(T4 box 38)" blank.