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 12700 of his 2019 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 2019 and to determine the loss balance that he can carry forward to a future year.
Step 1 - Pre-1986 capital loss balance available for 2019
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.
2. Capital gains deductions you claimed:
Step 2 - Applying net capital losses of other years to 2019
Complete lines A to C of the table in Step 3 before proceeding.
If you did not complete Step 1, enter the amount from line 7 on line 25300 of your 2019 income tax and benefit return. This is your deduction in 2019 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.
Step 3 - Calculating your balance of unapplied net capital losses of other years available to carry forward
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 2019||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 2019 (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)
Jerry has to apply his older losses first. Because the total amount of adjusted losses that he used in 2019 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 2020.
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