Capital Losses
Capital Losses
Is one required to report/register capital losses in the taxation year in which they occur regardless of whether one claims those losses against gains?
Thanks for any advice.
Thanks for any advice.
- scomac
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Re: Capital Losses
You claim your capital losses in the taxation year that they are realized. You can claim them against current or past capital gains. Barring that, the losses can be carried forward for future years.
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Re: Capital Losses
Thanks scomac.
Is there a limit on how many years back, and forward, one can either claim or carry those losses?
For example I had both significant capital gains on NT many years ago, selling some after the multiple splits and gains before the bubble burst, yet also now have about $25K in losses in riding the remainder, which at the time I considered "free" shares, to the bottom.
Is there a limit on how many years back, and forward, one can either claim or carry those losses?
For example I had both significant capital gains on NT many years ago, selling some after the multiple splits and gains before the bubble burst, yet also now have about $25K in losses in riding the remainder, which at the time I considered "free" shares, to the bottom.
Re: Capital Losses
http://www.taxtips.ca/filing/capitallosses.htmShine wrote:Is there a limit on how many years back, and forward, one can either claim or carry those losses?
3 years backwards, unlimited forward.
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Re: Capital Losses
A minor point, but capital losses must first be applied against any capital gains in the current year, then once current-year capital gains have been offset, the balance of the loss may either be carried back to offset capital gains in any of the three prior years or carried forward indefinitely to offset capital gains in future years.scomac wrote:You claim your capital losses in the taxation year that they are realized. You can claim them against current or past capital gains. Barring that, the losses can be carried forward for future years.
ltr
Re: Capital Losses
And they don't really offset capital gains in other years. Your gains (50% inclusion) go on net income and everything based on that remains the same. After that you can deduct the losses(50%) from txbl income.like_to_retire wrote:A minor point, but capital losses must first be applied against any capital gains in the current year, then once current-year capital gains have been offset, the balance of the loss may either be carried back to offset capital gains in any of the three prior years or carried forward indefinitely to offset capital gains in future years.scomac wrote:You claim your capital losses in the taxation year that they are realized. You can claim them against current or past capital gains. Barring that, the losses can be carried forward for future years.
ltr
newguy
Re: Capital Losses
Obviously I will have to research the link that Adrian2 posted. However you seem to suggest that one can only claim 50% of capital losses - is this true? Again for example, I have about $25K of capital losses on floating NT stock that my broker sold on the OTC during this year and I can only apply $12.5K against my complete taxable income and not directly to specific capital gains?new guy wrote:
And they don't really offset capital gains in other years. Your gains (50% inclusion) go on net income and everything based on that remains the same. After that you can deduct the losses(50%) from txbl income.
I am confused...this suggests I can apply capital losses to dividend income. True?
Thanks for your patience and advice.
Re: Capital Losses
No. Losses can only offset 1:1 gains, and no other income. The inclusion rate is the same for gains and for losses.Shine wrote:However you seem to suggest that one can only claim 50% of capital losses - is this true? Again for example, I have about $25K of capital losses on floating NT stock that my broker sold on the OTC during this year and I can only apply $12.5K against my complete taxable income and not directly to specific capital gains?
What I think newguy was referring to is that some benefits and credits are affected if the losses are used to offset gains in a different taxation year, the (+) and (-) amounts go onto different sections and some "collateral damage" may ensue. E.g., medical expense credit may be affected.
Once again, no.Shine wrote:I am confused...this suggests I can apply capital losses to dividend income. True?
Re: Capital Losses
No, capital losses can only be used to offset capital gains. I'm just saying the way it's done isn't the same as it would be in the current year. If you have gains and losses in the same year it's a straight subtraction. If the losses are to offset gains in another year then it's not done the same way. The gains are added on one line of the tax return, then certain calculations are made and then the losses are deducted. This may not impact you but it cost me a lot (all) of child tax credit benefits. The 50% is just how cap gains are done. If you lost (or made) $25k, only $12.5k is included in gains or losses. If it was from a long time ago maybe the rate was different.Shine wrote:Obviously I will have to research the link that Adrian2 posted. However you seem to suggest that one can only claim 50% of capital losses - is this true? Again for example, I have about $25K of capital losses on floating NT stock that my broker sold on the OTC during this year and I can only apply $12.5K against my complete taxable income and not directly to specific capital gains?new guy wrote:
And they don't really offset capital gains in other years. Your gains (50% inclusion) go on net income and everything based on that remains the same. After that you can deduct the losses(50%) from txbl income.
I am confused...this suggests I can apply capital losses to dividend income. True?
Thanks for your patience and advice.
newguy
Re: Capital Losses
Thanks for the reminder. I knew this and had overlooked it as I did some tax loss selling last week!like_to_retire wrote:A minor point, but capital losses must first be applied against any capital gains in the current year, then once current-year capital gains have been offset, the balance of the loss may either be carried back to offset capital gains in any of the three prior years or carried forward indefinitely to offset capital gains in future years.
ltr
Re: Capital Losses
Thank you all for your advice and comments.
I think I will have to engage a tax specialist to assist me going forward.
regards
I think I will have to engage a tax specialist to assist me going forward.
regards
Re: Capital Losses
Does this mean you're not trusting our collective advice, or that you think it's better to pay hundreds of dollars, on an ongoing basis, instead of filling out a few boxes yourself? WADR, it's not rocket science.Shine wrote:I think I will have to engage a tax specialist to assist me going forward.
Re: Capital Losses
If you use tax software you don't even need to know this stuff. How do you think I found out about the losses not exactly cancelling gains from other years. Everything I read here and other places said you can carry forward losses and deduct in the future, except it's not exactly true. It wasn't until I did my taxes and the tax software informed me how screwed I was.adrian2 wrote:Does this mean you're not trusting our collective advice, or that you think it's better to pay hundreds of dollars, on an ongoing basis, instead of filling out a few boxes yourself? WADR, it's not rocket science.Shine wrote:I think I will have to engage a tax specialist to assist me going forward.
newguy
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Re: Capital Losses
Buy the tax software - an out-of-date used 2010 return package will do - and enter the numbers. Play with it and then decide if a professional tax adviser is necessary.
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Re: Capital Losses
Don't expect to be told subtleties like this by your "tax specialist" (who, BTW, are not regulated by anybody, I can put a shingle outside my house calling myself "Adrian Tax Preparation, Planning & Knowledgeable Advice Inc").newguy wrote:If you use tax software you don't even need to know this stuff. How do you think I found out about the losses not exactly cancelling gains from other years. Everything I read here and other places said you can carry forward losses and deduct in the future, except it's not exactly true.
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Re: Capital Losses
By putting that shingle outside your house you could also claim to be "Adrian Shingle Installer, Roof Coverings Expert and House Renovations Inc."adrian2 wrote: I can put a shingle outside my house calling myself "Adrian Tax Preparation, Planning & Knowledgeable Advice Inc").
Re: Capital Losses
Certainly not. I truly appreciate the collective advice here on FWF. My comment regarding engaging a tax specialist was predicated by the fact that I also have significant unrealized capital gains within my investments and I need a strategy to balance losses/gains while shifting to a larger FX based portfolio as the years sweep over me.adrian2 wrote:
Does this mean you're not trusting our collective advice, or that you think it's better to pay hundreds of dollars, on an ongoing basis, instead of filling out a few boxes yourself? WADR, it's not rocket science.
This is only the second year I have done my own taxes -using Turbo Tax - and I found it made my blood pressure increase. I have always used a CGA, but my CGA retired two years ago and moved to the Bahama's and I did not like the firm that assumed his clients.
I find the income tax process frustrating and unnecessarily complicated. I may not be alone there.
Once again, thank you all for your comments and advice.
Re: Capital Losses
Concerning the transferring of capital losses between spouses.
Example: Spouse A sells 500 Shares of company X for a 10,000$ loss and immediately spouse B purchases 300 shares of the same company X and then a month later sells his entire position.
For taxation purposes, is spouse A considered to have a 4,000$ capital loss and spouse B a 6,000$ loss? (Or is the entire capital loss denied to spouse A)
Example: Spouse A sells 500 Shares of company X for a 10,000$ loss and immediately spouse B purchases 300 shares of the same company X and then a month later sells his entire position.
For taxation purposes, is spouse A considered to have a 4,000$ capital loss and spouse B a 6,000$ loss? (Or is the entire capital loss denied to spouse A)
"The term is over: the holidays have begun. The dream is ended: this is the morning."-C.S.Lewis, The Last Battle
- Peculiar_Investor
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Re: Capital Losses
I think StuBee's question is exactly what Tim Cesnick covered recently, This holiday season, make your capital losses count - The Globe and Mail.
In a follow-up, For tax savings, take advantage of four key deadlines - The Globe and Mail he indicatesTransfer losses
If you have losers in your portfolio but no gains against which to apply these losses, take a look at your spouse’s portfolio to see whether he or she has any capital gains. If so, there’s a way to effectively transfer your unrealized capital losses (losses on paper) to your spouse. (If you’ve already sold the investment this idea may still work if you realized the capital loss in the last 30 days.)
Nov. 22
This is the last day to initiate the transfer of unrealized capital losses from you to your spouse for your spouse to use those losses in 2011. I spoke about this strategy last week. The first step in the strategy is to sell some of your investments that have declined in value. This step needs to be done on or before Nov. 22 to ensure that the strategy can be completed by the end of the calendar year (see last week’s article for more details, tgam.ca/DEOA).
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Re: Capital Losses
Thanks for your reply Peculiar investor! However, it does not answer my question...
"The term is over: the holidays have begun. The dream is ended: this is the morning."-C.S.Lewis, The Last Battle
- Peculiar_Investor
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Re: Capital Losses
Ah, I didn't catch the fact that a different number of shares were re-purchased. So let's try again.
I would think that in your example, 300 shares are 'identical properties' for the purposes of IT-387R2 (Consolidated) Meaning of "Identical Properties" and therefore Spouse A has 200 shares that are treated per normal tax rules. I'm not an accountant, so perhaps one of our resident experts (DavidR) could chime in and confirm.
I would think that in your example, 300 shares are 'identical properties' for the purposes of IT-387R2 (Consolidated) Meaning of "Identical Properties" and therefore Spouse A has 200 shares that are treated per normal tax rules. I'm not an accountant, so perhaps one of our resident experts (DavidR) could chime in and confirm.
finiki, the Canadian financial wiki New editors wanted and welcomed, please help collaborate and improve the wiki.
Normal people… believe that if it ain’t broke, don’t fix it. Engineers believe that if it ain’t broke, it doesn’t have enough features yet. – Scott Adams
Normal people… believe that if it ain’t broke, don’t fix it. Engineers believe that if it ain’t broke, it doesn’t have enough features yet. – Scott Adams
Re: Capital Losses
I agree with PI's answer.
The superficial loss rules would apply to only 300 of the 500 shares.
So in Stubee's example, Spouse A reports a $4,000 capital loss and spouse B $6,000
The superficial loss rules would apply to only 300 of the 500 shares.
So in Stubee's example, Spouse A reports a $4,000 capital loss and spouse B $6,000
Re: Capital Losses
Thanks DavidR
"The term is over: the holidays have begun. The dream is ended: this is the morning."-C.S.Lewis, The Last Battle
Re: Capital Losses
As this is the season of tax loss selling, my question pertains to capital losses carried forward. So far I have only carried back losses.
To date I have not claimed Carried Forward Capital Losses (Net capital losses of other years) Line253 on the tax form.
Playing around with tax software it seems to me that the total carried forward amount is deducted from Net Income to calculate Taxable Income even if the carried forward amount is more than the taxable capital gain for the year under consideration.
For example Taxable Capital Gain of $205 reported on Line 127
Net capital losses from other years reported on Line 253 of $350
Anyone care to comment?
To date I have not claimed Carried Forward Capital Losses (Net capital losses of other years) Line253 on the tax form.
Playing around with tax software it seems to me that the total carried forward amount is deducted from Net Income to calculate Taxable Income even if the carried forward amount is more than the taxable capital gain for the year under consideration.
For example Taxable Capital Gain of $205 reported on Line 127
Net capital losses from other years reported on Line 253 of $350
Anyone care to comment?
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Re: Capital Losses
Perhaps there is something wrong with the tax software that you are using? I just tried using CanTax and if line 127 is $205 and if the net capital loss carryforward is $350, CanTax limits the amount deducted on line 253 to $205.CROCKD wrote:As this is the season of tax loss selling, my question pertains to capital losses carried forward. So far I have only carried back losses.
To date I have not claimed Carried Forward Capital Losses (Net capital losses of other years) Line253 on the tax form.
Playing around with tax software it seems to me that the total carried forward amount is deducted from Net Income to calculate Taxable Income even if the carried forward amount is more than the taxable capital gain for the year under consideration.
For example Taxable Capital Gain of $205 reported on Line 127
Net capital losses from other years reported on Line 253 of $350
Anyone care to comment?