GIS calculation - Capital Gains - Unused Capital Losses

Preparing for life after work. RRSPs, RRIFs, TFSAs, annuities and meeting future financial and psychological needs.
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luba
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GIS calculation - Capital Gains - Unused Capital Losses

Post by luba »

I hope I understand correctly that for calculating income tax payable as well as our Guaranteed Income Supplement the use of unused capital losses of previous years does reduce the current year capital gains?

Am I understanding correctly that the application of unused capital losses of previous years does not reduce this years capital gains for the purpose of calculating my Guaranteed Income Supplement?
appreciated,
Luba
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newguy
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Re: GIS calculation - Capital Gains - Unused Capital Losses

Post by newguy »

luba wrote:I hope I understand correctly that for calculating income tax payable as well as our Guaranteed Income Supplement the use of unused capital losses of previous years does reduce the current year capital gains?

Am I understanding correctly that the application of unused capital losses of previous years does not reduce this years capital gains for the purpose of calculating my Guaranteed Income Supplement?
appreciated,
Luba
No to 1. It doesn't reduce this years cap gains, they will be fully included in your net income on line 236. On line 253 you will get a reduction for previous cap losses so your taxable income on line 260 will be lowered. Notice that everything that depends on net income doesn't benefit from the capital loss carry forward.

For 2, you're correct. You can get the current year GIS income calculation here.
http://www.servicecanada.gc.ca/eforms/f ... 3-12)e.pdf

Look at the line numbers corresponding to your tax return. 127 is there but 253 isn't. :cry:

newguy

ps welcome to FWF.

edit: fix link
Last edited by newguy on 21 Jul 2014 21:55, edited 1 time in total.
luba
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Re: GIS calculation - Capital Gains - Unused Capital Losses

Post by luba »

I hope that I understand correctly that to redo previous years' taxes with a capital gains loss carry-back using this current year's capital losses would have no affect on my GIS eligibility calculation.
2) Will a capital loss of the taxation year used to eliminate a capital gain of equal amount of the same year affect the calculation of the Guaranteed Income Supplement by reducing capital gains income for the year?
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newguy
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Re: GIS calculation - Capital Gains - Unused Capital Losses

Post by newguy »

luba wrote:I hope that I understand correctly that to redo previous years' taxes with a capital gains loss carry-back using this current year's capital losses would have no affect on my GIS eligibility calculation.
2) Will a capital loss of the taxation year used to eliminate a capital gain of equal amount of the same year affect the calculation of the Guaranteed Income Supplement by reducing capital gains income for the year?
1) That's my guess. I'm almost certain you can't increase GIS that way.

2) yes. Before reporting capital gains, you first subtract any losses in the same year, then report on line 127 the net amount (not less than 0). Only if it's negative can you carry it forward or back.

Note that if you have capital gains, you can't can't carry back losses until you've used up all the gains in the current year.

newguy
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