Inputting previous years Capital Loss

[PeteH]

Hi all, 

CRA recently completed some re-assessments. As a result, they have adjusted my previous years' capital gain/loss to be carried forward in future tax years. 

My question is - I see under CRA online account for Carry over amounts:

Year | Inclusion Rate |Line 127|Unapplied net Loss|Net loss applied from prior years|Net loss applied from subsequent year|

How do I find out exactly what's the net capital gain/loss in my carryover amount so far? Do I simply take the sum of Unapplied net loss and subtract Net loss applied from prior years, and if its a positive amount means I have unapplied net loss? And how would I enter this single figure onto UFile, as this involves multiple tax years? 

Another question is regarding the inclusion rate, it's showing as 50%. So my question is if all the figures on CRA site were reduced by 50% already and if I should bump it up by 50% to input on UFile ? 

Thanks in advance for your response! 

 

[Maggie3]

Hello PeteH,

The most recent amount (balance of your losses) should be entered on your last Notice of Assessment.  If you were reassessed, then the up-to-date amount should be entered on your Notice of Assessment.

The inclusion rate means your capital gains are  taxed at 50% of your total gain. You should not bump up the amounts. 

You may enter these amounts into UFile by following the steps below: Applying net capital loss from previous years

If you have sustained some capital losses in the previous years. 
To carry over these losses using the program, please follow these steps:

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

2-On the page appearing on the right, go to the group "Carryforward amounts and prior year information", check the box "Losses of prior years, carrybacks". Click "Next" at the bottom of the page.

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

4-On the screen generated on your right, go to the "Losses of other years" group, and choose the line "Net capital losses of other years".

5-On the page that appears, enter the amount of your updated loss from previous years on the line for 2021. This represents the  remaining balance of your losses of previous years. The program will automatically calculate this amount to reduce your future gains.

For more information, please visit the following CRA link:

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

 

[PeteH]

Hi Maggie, 

Thanks for your response. The thing is the re-assessment is not for the previous tax year, but actually involved 2013, 2014, and 2018 tax years. In that case, the 2021 will not show the correct net capital loss since it was not re-assessed. Should I then make my own calculation based on the Carryover amounts table on CRA website, to find the net capital loss applicable up until 2021?

I'm also a resident in Quebec, and Revenu Quebec does not provide a Carryover amounts table as CRA. Do I need to input two sets of prior year capital losses separately for both CRA and Quebec? Since the reassessment was only done with CRA, the net capital losses will be different between CRA and Revenu Quebec. 

Thanks again.

[Maggie3]

Hello PeteH,

Even if you were reassessed for previous years –The CRA would have had to correct all the subsequent years so that  the end result for 2021 is correct.  Please follow the steps outlined in the previous email.

If you have the amount for Quebec and it is different from the Federal amount, then on the “Net capital losses of other years” page enter the Federal amount first then click on the little maple leaf next to it and enter the Quebec amount.  

The program will automatically calculate the deduction for Federal on line 25300 and for  Quebec on line 290 if you have any capital gains.

Hope this helps.

[PeteH]

Hi Maggie, 

Thanks for your response. So just to clarify, I would then look at the "Unapplied net loss" figure for 2021 under CRA's carryover amounts? Right now I have "0" showing under unapplied net loss for 2021, but I also notice the figure for "line 127" is larger than "net loss applied from prior year" in 2021. Does this mean the difference is the un-used net loss that I can carry forward? 

Regarding the net loss to apply in Revenu Quebec, would it be possible to not apply the loss in my Revenu Quebec taxes? If so, should I input "0" for the Quebec amount (otherwise the software would assume the same loss amount would apply to both CRA and Revenu Quebec)? 

Thanks again!

[Maggie3]

Hello PeteH,

The figure in 2021 should be the up-to-date amount available to deduct for net capital losses. If the amount is zero, you have no more losses to deduct.

To confirm you may view your Notice of Assessment for 2021 which will indicate the amount of net capital losses available to deduct.

Line 12700 represents capital gains you have declared in 2021. The figure is larger because you may not have sufficient losses to offset your gain.

Please refer to the link below for more information regarding the application of your net capital losses:

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/capital-losses-deductions/other-year-losses-carried-forward.html

The same principle applies for Revenu Québec. Enter the amount from your latest Notice of assessment from Quebec. You may limit the deduction by clicking on the little maple leaf at the bottom of the page and enter the amount to limit for Quebec on the line “Limit to the deductible capital loss applied this year”.

If you do not indicate a different amount for Quebec, the same amount will be applied for both Federal and Quebec.

[Tatiana81]

On 10/17/2022 at 12:05 PM, Maggie3 said:

Hello PeteH,

The most recent amount (balance of your losses) should be entered on your last Notice of Assessment.  If you were reassessed, then the up-to-date amount should be entered on your Notice of Assessment.

The inclusion rate means your capital gains are  taxed at 50% of your total gain. You should not bump up the amounts. 

You may enter these amounts into UFile by following the steps below: Applying net capital loss from previous years

If you have sustained some capital losses in the previous years. 
To carry over these losses using the program, please follow these steps:

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

2-On the page appearing on the right, go to the group "Carryforward amounts and prior year information", check the box "Losses of prior years, carrybacks". Click "Next" at the bottom of the page.

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

4-On the screen generated on your right, go to the "Losses of other years" group, and choose the line "Net capital losses of other years".

5-On the page that appears, enter the amount of your updated loss from previous years on the line for 2021. This represents the  remaining balance of your losses of previous years. The program will automatically calculate this amount to reduce your future gains.

For more information, please visit the following CRA link:

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

 

Hi Maggie, I have more or less similar issue .. I have followed the steps you outlined above and for some reasons the program does now automatically applies net loss from 2021 to gain in 2022. Wonder if I missed something? Thank you for your response in advance .

[Geo123]

Hello Tatiana81,

RE : Line 25300 - Net capital losses of other years AND  Line 12700 - Capital gains.

If you have both capital gains and capital losses, you can offset the capital gains with capital losses until you reach zero. If you only have capital losses, the CRA allows you to use the capital loss to offset a capital gain you originally declared in the previous 3 years (Loss carryback), or you are allowed to carry forward the capital loss into the future

 

Capital Loss Carry Forward

To enter prior year Capital losses please go to :

>>Interview Set Up >> Carryforward amounts and prior year information

>>Losses of prior years, carrybacks

>>Select appropriate class eg. Stocks/Bonds =  Net capital losses of other years

>>Enter Capital loss

 

Capital Losses will offset capital gains as follows :

CRA : Line 25300 - Net capital losses of other years / Line 12700 - Capital gains.

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-25300-net-capital-losses-other-years.html