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Capital Loss in 2020


MP18
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Hello, 

Is there a way to carry back investment losses from 2020 to previous years with capital gains (2017, 2018 and 2019)?

In the "Capital gain history" page of the "Capital gains (or losses) and ABIL" tab, I am not able to select 2020 as a year. 

 

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/you-use-a-capital-loss.html

 

Thanks in advance.

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Hi MP18. Yes there is. Go back to the Interview setup. On the right side look for the last section "Carryforward amounts and prior year information". Select "Losses of prior years, carrybacks" and that will give you the data entry area. You only need to complete this carryback request, nothing else needs to be done. Do not try and do a T1-Adj.

Now usually its best to go back three years and claim the losses against gains but you also need to look at the tax bracket you were in for the last three years and consider selecting the year you were in a higher bracket. If you go back only to 2019 and you incur losses again in 2021 you will not later to be able to go after 2018 gains. That is why its usually best to go after the oldest year.

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Hi TheTaxSmith. Thanks for the tip! I definitely intend to use the oldest year. From Interview setup, once I get the "Losses of prior years, carrybacks" tab, I will have to select a page. I selected "T1A - Request for Loss Carryback (loss which occured in 2020)" since my specific situation applies where I had gains previous years and loss this year. Then I entered my gains from 2017 in the "Amount to be applied to 2017" box. However, it doesn't seem to change the results in any way. I wonder if I'm doing something wrong. 

 

Thanks again

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Hi MP18. You are effectively asking CRA to reassess year 2017 and send you a refund. It will not affect your 2020 return.

You need to enter the lower of the the amount of loss incurred for 2020 and your 2017 gains on that schedule for carryback. So if the 2017 gains were more than the 2020 loss then you enter the full 2020 loss for 2017. If however your 2020 loss is greater than your 2017 gains then you enter the actual 2017 gains you claimed in 2017 in the schedule and any balance you will enter in 2018 and so on. You can only claim the lower of the 2020 loss or the actual 2017 gains,  

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Thank you TheTaxSmith. It certainly makes more sense now. My 2020 loss value was greater than 2017 and 2018. So it looks like I'll be able to ask CRA to evaluate both 2017 and 2018 for me and the leftover losses can be claimed in the future. Thanks again for the information and tip! 

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