T2125 Net Income Loss

[Linx]

Hello

 

This is the third filing of a T2125 form (sole proprietor) using Ufile. The first two years there was

a modest net profit but this year there will be a modest net loss.

 

What I like to know is how does UFile handle the net loss i.e. Is there a carry forward?

 

Thanks

Linx

[Bretonix]

The business loss showing in the Self-employment income section of the T1 return, page 2, is applied against all other income.

If the result is a negative amount in line 150 (total income),

 - Form T1-A (Request for Loss Carryback) is triggered

 - Non capital loss CF (Federal) worksheet is generated

 

You are entitled to carry the loss back three (3) years or forward 10 years.

The carry forward is done by UFile when you trigger the carry forward of your file from one year to the next.

[enfance]

Hello,

Even if the result is a positive amount in line 150 (total income), could I still file a Form T1-A (Request for Loss Carryback) or Non capital loss CF (Federal) worksheet? Where could I find Non capital loss CF (Federal) worksheet?

[Antoine7]

Hello enfance,

Current year capital loss carryback

If you incurred net capital losses in the current year, you can carry back these losses and apply them to the capital gains of the past THREE years.

1. In the "Left-side menu on the Interview tab", select "Interview setup".

2. On the right-hand side of the screen, go to the "Investment income and expenses" group, check the Box "Capital gains (or losses) and capital gain history", then go to the "Other topics" group, check the Box for "Losses of prior years, carrybacks" and click on "Next" at the bottom of the screen.

3. Return to the "Left-side menu on the Interview tab" and select "Capital Gains (or losses) & ABIL" on the right-hand page, choose the option that suits you and enter your capital gains or capital losses.

4. Return once again to the "Left-side menu on the Interview tab" and select "Losses of prior years and carrybacks".

5. On the screen to the right, scroll down to "Loss carryback" group, and click on the plus "+" icon to the right of the line "T1A - Request for loss carryback (loss which occurred in 2018".

6. In the page that appears entitled "T1A - Request for current year loss carryback" choose the section that corresponds to your situation and select the year or years for which you want to apply your losses, starting with the loss from the earliest year to carry-back years.

The program will generate Federal form T1A as well as Quebec form TP- 1012.A.

Quebec residents will have to print form TP- 1012.A, sign it and mail SEPARATELY from other documents, because it cannot be netfiled, whereas the Federal T1A can be sent via NETFILE.

The T1A does not affect the current year's tax return. The CRA and Revenu Québec will reassess the corresponding year's tax returns based on the information in the T1A or TP-1012. They will issue you a report at a later date.

For more information on this topic, please see the following links

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-127-capital-gains/capital-losses-deductions.html

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-253-net-capital-losses-other-years.html