Non capital loss


How does non-capital loss works? Thanks!

Corporate? Personal? Details are required for any form of an answer. For general information, google it.


My question is, do you only use non-capital loss balance against taxable income that generates income tax payable?


This will be handled by your tax accountant (who may be a Taxcycle user), so you should really refer your question to them.

The answers to your question are generally to be found in ITA S110 and S111, so you may want to review them, in great detail, also paying attention to S111.1

“Short-cutting” the legal provisions is most definitely not advised as legal problems may ensue.
In addition, many considerations would be taken into account by qualified and experienced tax practitioners, so disadvantages could accrue to the taxpaying entity if not handled carefully.

The use is governed by statute law. Therefore the user should be well versed in that law. If a corporation, of course the corporations qualified professional accountant will be assisting and advising the corporation’s directors on such matters.

No. Allowable capital losses are applied against taxable capital gains. They cannot be used to reduce taxable income or to increase losses.

If you have a capital loss, your tax return should be prepared by a professional accountant, in order to claim the correct amount and to carryforward/carryback any unutilized amount properly. It’s a bit more complicated than you might think.

I thought non-capital loss is from a business loss and capital loss is loss from selling assets?

@nikayvin You are correct, current year non-capital losses can be applied against prior year taxes paid on business income. Your first post was unclear, leading us to wrong conclusions.

Sorry about that.
What if i do have a little taxable income and no taxes to paid, then there is no need to use the non-capital loss??


As you have written it, that would be illegal if you try, and in any event, impossible.

Please - Novice self-help in legal matters almost always leads to severe legal trouble.

It is clear that you are not understanding the legal complexities.
Refer your issues to the appropriate Professional Accountant (CPA).

I am assuming that your non-capital loss came from a prior year. If you have no taxes to pay, the non-capital loss remains available for use in a subsequent year. If my assumption is wrong, you should listen to @joe.justjoe1. He is very experienced and knows what he is talking about.

And another word of caution, I am not a CPA.

I am not sure if it is a good practice to take discussions over the internet and apply to your real corporate T2 tax without any background in accounting. I understand some folks believe they can save on the accounting cost. Less they know that they can get hooked by the CRA for errors and pay the price ten fold.

My man needs an accountant to do his corporate tax and have peace of mind. The entire cost is deductible as an expense.

@Cameron @taxcycle Can we have this forum set up so that only Taxcycle users are members?


Yes! This!

There are other public fora available for non-TC users/pros to ask questions.
(Or at least “TC potential users” as there are some pre-sales queries and the community seems genuinely happy to assist with those.)

That would take all the fun out and Joe wouldn’t have anyone to scare with jail time.


This question should be stated in its own section, outside of the question of Non-Capital Losses where it doesn’t belong. It’s also been raised before with no action taken by the TaxCycle admin.

Having said that, I first discovered and joined this group in March 2020 while being with Profile (since 2000), and Cantax before that. It was the professionalism in this forum that convinced me to switch to TaxCycle for the 2021 tax season, and I couldn’t be happier. So personally, I’m very grateful that TaxCycle allowed me to join this forum before actually purchasing a license to use the software.

What I’ve found is that the real issue is not so much with other Tax Professionals (like myself) joining this forum, but rather with opening the forum to the lay person doing their own tax returns who don’t have knowledge of the ITA or tax legislation and who should be seeking a CPA or other tax professionals for assistance in filing their tax returns.

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An option could be, before anyone can join the forum they should answer a tax question or something similar.

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Well, I think you can apply non-capital losses (NCL) against NON-taxable income, but why would you bother?

Or are you asking if NCL balances are REFUNDABLE when they EXCEED taxable income? No.

Or are you asking if NCL balances MUST be applied if there is taxable income? No, you don’t have to use them if you don’t want to. That is, if you have a NCL balance from a prior year, and taxable income in the current year, you can CHOOSE not to use the NCL in the current year, and rather carry it forward. However, remember that NCL balances expire 20 years from when they arose.