Summary of loss application rules

This table is a summary of the various types of capital losses, the time limits relating to their application, and to what kind of income they can be applied.
Type of loss Application rules Limit to annual deduction
Allowable business investment loss Any unapplied portion of an ABIL incurred in 2004 or future years becomes a non-capital loss that can be carried back 3 years and forward 10 years.

The unapplied portion of the non-capital loss will become a net capital loss that can be used to reduce taxable capital gains in the eleventh year or any year after.1
No limit




Limited to taxable capital gains in the year.
Net capital loss Carry back 3 years

Carry forward indefinitely
Limited to taxable capital gains in the year. 2
Farm loss 3 Carry back 3 years

For a loss incurred after 2005, carry forward 20 years. For a loss incurred before 2006, carry forward 10 years.
No limit
Listed personal property (LPP) loss Carry back 3 years

Carry forward 7 years
Limited to net gains from LPP in the year.
Personal-use property loss No loss allowed. 4 Not applicable
Restricted farm loss Carry back 3 years

For a loss incurred after 2005, carry forward 20 years. For a loss incurred before 2006, carry forward 10 years.

You can use part of any unapplied loss to reduce your capital gains from the sale of the farmland that was used in a farming business.
Limited to net farming income in the year.

Cannot be more than the property taxes and the interest on money you borrowed to buy the farmland that you included in the calculation of the restricted farm losses for each year. You cannot use it to create or increase a capital loss.
Superficial loss No loss allowed

You can usually add the amount of the loss to the adjusted cost base of the substituted property.
Not applicable
1 Any unapplied portion of an ABIL incurred in 2003 or prior years became a non-capital loss that could be carried back 3 years and forward 7 years. The unapplied portion of the non-capital loss has become a net capital loss that can be used to reduce taxable capital gains in the eighth year or any year after.

2 For net capital losses incurred before May 23, 1985, you may deduct an additional amount (up to $2,000) from other income. For more information, see How are other year losses carried forward to 2018?

3 For the purposes of this chart, farm losses include losses from a farming or fishing business. For more information, see Guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income, RC4060, Farming Income and the AgriStability and AgriInvest Programs Guide or RC4408, Farming Income and the AgriStability and AgriInvest Programs Harmonized Guide.

4 For exceptions to this rule, see Personal-use property.
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