If you had a non-capital loss in 2016, you need to report it on your income tax return. Sometimes, non-capital losses can be used to reduce your taxable income!
Non-capital losses can include the losses you had related to your job, a property, business, and unused allowable business investment losses (ABIL) that were realized during the year. If your ABIL is more than your other income from other sources for 2016, include the difference as part of your non-capital loss this year.
When you apply non-capital losses against other sources of income, it lowers your taxable income for the year. If you have leftover non-capital losses or unapplied losses from previous years (check your notice of assessment or reassessment), you can generally carry these amounts back up to 3 years by using form T1A: Request for loss carryback. These amounts can also be carried forward, depending on when you had incurred a non-capital loss:
- Losses from before March 23, 2004 can be carried forward for up to 7 years
- Losses from years after March 22, 2004 and before December 31, 2005 can be carried forward for up to 10 years
- Losses from after 2005 can be carried forward for up to 20 years
It’s important to know that the carryforward extension doesn’t apply to a non-capital loss that came from an ABIL. Instead, your unused non-capital loses will become net capital losses after 7 or 10 years (for losses from before March 23, 2004 or after March 22, 2004, respectively). Visit the CRA website for more information on non-capital losses from other years.
If you’re a resident of Québec, you can calculate your non-capital losses using form TP-1012.QA-V: Carryback of a loss. For more information on deductions you can claim for non-capital losses from other years, visit the Revenu Québec website.
When you report your non-capital losses history on the non-capital losses page of your return, H&R Block’s tax software will automatically calculate and apply a deduction, if applicable, for any non-capital losses of other years that you might have. To see a breakdown of your non-capital losses on a year by year basis, and for the additional information needed to complete this section, log into the CRA My Account service (registration required).
Note: If you don’t want to claim non-capital losses of other years on your 2016 return, there’s no need to complete this section. It’s important to remember however that non-capital losses can’t be carried forward indefinitely. For more information, check out the CRA website.
Where do I claim this?
Follow these steps in H&R Block’s tax software to file your 2016 taxes:
- On the PREPARE tab, select the LET’S TALK ABOUT 2016 icon.
- Select the checkbox labelled I had investments and/or investment income, or I bought and/or sold property.
- Click the PENSION PLANS AND INVESTMENTS icon. You’ll find yourself here:
- Under the INVESTMENT INCOME heading, select the checkbox labelled Non-capital losses, then click Continue.
- When you arrive at the Non-capital losses page, enter your information into the tax software.