Example of a completed Chart 5

Jerry has unapplied net capital losses of $6,000 he incurred before May 23, 1985. He claimed a capital gains deduction of $500 in 1986 and of $300 in 2000 (Jerry's inclusion rate in 2000 was 2/3 or 66.6666%). Jerry also has the following unapplied net capital losses: $4,000 from 1988 and $6,000 from 1990. He reported a taxable capital gain of $10,000 on line 127 of his 2018 income tax and benefit return. He completes Chart 5 to calculate the maximum deduction he can claim for his unapplied net capital losses of other years in 2018 and to determine the loss balance that he can carry forward to a future year.

Step 1 - Pre-1986 capital loss balance available for 2018
Complete this step only if you have a balance of unapplied net capital losses from before May 23, 1985. Otherwise, enter "0" on line 3 and go to Step 2.

1. Balance of unapplied net capital losses you had before May 23, 1985
$6,000
Line 1

2. Capital gains deductions you claimed:

Before 1988
$500
 
In 1988 and 1989
$ Blank space for dollar value
x 3/4 =
Blank space for dollar value
 
From 1990 to 1999
$ Blank space for dollar value
x 2/3 =
Blank space for dollar value
 
In 2000
$300
x [1 ÷ (2 x IR)]=
$225
 
From 2001 to 2017
Blank space for dollar value
 
Total capital gains deductions after adjustment
$725
− $725
Line 2
 
3. Pre-1986 capital loss balance available for 2018 (line 1 minus line 2)
$5,275
Line 3

Step 2 - Applying net capital losses of other years to 2018
Complete lines A to C of the table in Step 3 before proceeding.

4. Total unapplied adjusted net capital losses of other years (total from line C in Step 3)
$13,000
Line 4
5. Taxable capital gains from line 127 of your 2018 income tax and benefit return
$10,000
Line 5
 
6. Enter the amount from line 4 or line 5, whichever is less
$10,000
Line 6
7. You can apply all, or part, of the amount on line 6 against your taxable capital gains in 2018. Enter on line 7 the amount of losses you want to claim
− $10,000
Line 7

If you did not complete Step 1, enter the amount from line 7 on line 253 of your 2018 income tax and benefit return. This is your deduction in 2018 for net capital losses of other years. Do not complete lines 8 to 15 and enter this same amount on line 16 in Step 3. However, complete lines D to G in Step 3 of this table to calculate the net capital losses available to carry forward to future years.

If you completed Step 1, complete lines 8 to 16 and lines D to G in Step 3 of this table to calculate the net capital losses available to carry forward to future years.

8. Balance of unapplied adjusted net capital losses of other years not used to reduce taxable capital gains (line 4 minus line 7)
$3,000
Line 8
 
9. Amount from line 8
$3,000
Line 9
 
10. Amount from line 3
$5,275
Line 10
 
11. Pre-1986 deductible amount
$2,000
Line 11
 
12. Line 9, 10, or 11, whichever is less
$2,000
Line 12
 
13. Deduction in 2018 for net capital losses of other years (line 7 plus line 12). Enter this amount on line 253 of your 2018 income tax and benefit return and complete the rest of the chart to determine your balance of unapplied net capital losses available to carry forward.
$12,000
Line 13

Step 3 - Calculating your balance of unapplied net capital losses of other years available to carry forward

14. Amount from line 7
$10,000
Line 14
15. Amount from line 12
$2,000
Line 15
16. Total adjusted net capital losses of other years applied in 2018 (line 14 plus line 15)
$12,000
Line 16

When you complete this table, replace "IR" with your inclusion rate for 2000. This rate is from line 16 in Part 4 of Schedule 3 for 2000, or from your notice of assessment or latest notice of reassessment for 2000.

 
  Before May 23, 1985 After May 22, 1985, and before 1988 In 1988 and 1989 After 1989 and before 2000 In 2000 After 2000 and before 2018 Total
A Amount of your unapplied net capital losses 6,000 0 4,000 6,000 0 0 Not applicable
B Adjustment factor 1 1 3/4 2/3 1 ÷ (2 x IR) 1 Not applicable
C (Line A x line B) 6,000 0 3,000 4,000 0 0 13,000
D Total adjusted net capital losses applied against taxable capital gains in 2018 (the total must equal the amount on line 16) 6,000 0 3,000 3,000 0 0 12,000
E (Line C − line D) 0 0 0 1,000 0 0 * 1,000
F Adjustment factor 1 1 4/3 3/2 2 x IR 1 Not applicable
G Net capital losses available to carry forward to future years
(Line E xline F)
0 0 0 1,500 0 0 Not applicable

Jerry has to apply his older losses first. Because the total amount of adjusted losses that he used in 2018 was $12,000 (from line 16 above), he applies $6,000 of his adjusted net capital losses incurred before May 23, 1985, and $3,000 of his adjusted net capital loss incurred in 1988. He then uses $3,000 ($12,000 − $6,000 − $3,000) of his adjusted net capital loss incurred in 1990. Jerry has unapplied net capital losses of $1,500 that he can carry forward to a future year.

* The total for line E should be equal to the amount shown on your notice of assessment or reassessment for net capital losses of other years available for 2019.

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