How are other year losses carried forward to 2018?

You can apply your net capital losses of other years to your taxable capital gains in 2018. However, the amount you claim depends on when you incurred the loss. This is because the inclusion rate used to determine taxable capital gains and allowable capital losses has changed over the years.

You have to apply net capital losses of earlier years before you apply net capital losses of later years. For example, if you have net capital losses in 1994 and 1996 and want to apply them against your taxable capital gains in 2018, you have to follow a certain order. First apply your 1994 net capital loss, then apply your 1996 net capital loss against your taxable capital gain. Keep separate balances of unapplied net capital losses for each year. This will help you keep track of your capital losses.

You can use a net capital loss of a previous year to reduce a taxable capital gain in 2018. If the inclusion rates for the 2 years are different, you must adjust the amount of the net capital loss to match the inclusion rate for 2018. Determine the adjustment factor by dividing the inclusion rate for 2018 by the inclusion rate for the year in which the loss arose.

Note

When you apply a net capital loss from a previous year to the current year's taxable capital gain, it will reduce your taxable income for the current year. However, your net income, which is used to calculate certain credits and benefits, will not change.

Completing your return

To apply your net capital losses of other years against your taxable income, enter the amount you are claiming as a deduction on line 253 of your 2018 income tax and benefit return.

Special rules apply if you have a balance of unapplied net capital losses from before May 23, 1985. Before claiming your deduction, see Losses incurred before May 23, 1985.

If you do not have a balance of unapplied net capital losses from before May 23, 1985, and your 2017 notice of assessment or reassessment shows that you have unapplied net capital losses of other years or a 2017 net capital loss, you can use the following chart to determine your net capital losses of other years that you can apply to 2018:

Chart 4 - Applying net capital losses of other years to 2018

1. Total unapplied net capital losses available from before 2017 (from your 2017 notice of assessment or reassessment)

$ Blank space for dollar value
Line 1

2. Your 2017 net capital loss (from your 2017 notice of assessment or reassessment)

$ Blank space for dollar value
Line 2

3. Line 1 plus Line 2

$ Blank space for dollar value
Line 3

4. Your 2018 taxable capital gains (from line 127 of your 2018 income tax and benefit return)

$ Blank space for dollar value
Line 4

5. Enter the amount from line 3 or line 4, whichever is less

$ Blank space for dollar value
Line 5

6. You can apply all, or part of, the amount on line 5 against your taxable capital gains in 2018. Enter on line 6 the amount of losses you want to claim and enter this amount on line 253 of your 2018 income tax and benefit return.

$ Blank space for dollar value
Line 6

7. Balance of unapplied net capital losses of other years not used to reduce taxable capital gains and available to carry forward to future years (line 3 minus line 6)

$ Blank space for dollar value
Line 7

For more information on determining your net capital losses of other years that you can apply to 2018 and your unapplied balance that you can carry forward to future years, see Determining your net capital losses of other years you can apply against 2018.

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