I’m not sure whether this is an issue with the T2 Software or whether it is a CRA issue.
In 2019 I filed a T2 return whereby the client had a capital gain of $266. The client had capital losses in 2015 of $1,055. While preparing the 2019 T2 return I chose not to apply the capital gain against the capital losses by answering “Yes” and entering zero online 225 of schedule 4. The 2019 capital gains were not applied to the capital losses, and the 1,055 (from 2015) was carried forward to 2020.
When I carried forward the T2 return to 2020 Taxcycle brought forward the $1,055 as I would have expected. After performing an AFR, TaxCycle gives me a yellow diagnostic message on line 200 of Schedule 4 that says “Capital loss for the previous tax year in T2 does not match the T2 Auto-fill value. Use value from AFR”.
It seems that TaxCycle is using the running total amount of Capital Gains and losses from the T2 Auto-fill (AFR) screen and assuming this net figure is the amount of the net capital loss carryforward.
Is it actually safe to assume this total figure (total accumulated capital gains less total capital losses) is the “net capital loss carryforward”? I don’t think we can assume that, especially in my case where it is not true.
Even though I can see that same data (that TaxCycle scrapes) in the CRA Represent a Client, there is no way to verify what figure the CRA actually has for Net Capital Losses carried forward. Unlike the Non-capital losses, this section merely just lists out the gains and losses reported each year.
To summarize, I don’t think TaxCycle can or should infer the Total figure (capital losses minus capital gains) in the T2 Auto-fill represents the “Net Capital Losses” carried forward at the end of the previous tax year.
If TaxCycle is picking up a correct carry forward from CRA for Net Capital Losses then I suppose the CRA assessed the client’s T2 return incorrectly in 2019. Unless TaxCycle has access to data that we can’t view in Represent a Client, I just don’t see that we are able to actually determine the amount of Net Capital Losses carried forward from the information available from CRA (via Represent a Client).