How to correct TurboTax incorrect calculation of taxable Capital gains using CNIL? Entrances in CNIL section should offset the taxable gains and do not double them.

[peter-m]

I am using Turbo Tax Standard 2025 which seems to have a bug and cannot correctly calculate taxable capital gains and CNIL amounts. For example: If you have a CNIL of $5,000 from previous years that has been imported to the TurboTax from previous year return, and you sold a stock which generated capital gains of $10,000 which had been entered with T5008 slip, as a result the $5,000 is added as taxable income. This is correct as capital gains are taxed at 50%. However, when you check the box to “Calculate Cumulative Net Investment Loss (CNIL) “ under “Your capital gains profile for 2025” and entering there required information, the amount of taxable gains doubles to $10,000. This in my opinion is incorrect for two reasons. For one if entering the same capital gains via T5008 slip and then again in “Capital Gains (or Losses) in 2025“ seems to me as double Deeping, and Turbo Tax should not ask you to do so. Instead it should use the information from T5008 slip and populate this information in CNIL form if you select to calculate CNIL. Secondly, the CNIL amount imported from previous years should be used to offset taxable gain for current year as part of Capital Gains Deductions. This however, does not seem to be working either. I would expect the following result with given example above: Capital Gains of $10,000 (entered via T5008 form) should be taxed at 50% which should result in $5,000 of taxable income. However, because the is a CNLI of $5000 the taxable amount of capital gains should be reduced by this number resulting in $0 for taxable amount for capital gains. Could you please explain why TurboTax doubles the taxable amount instead of reducing it?

[TurboTax_Susan]

The T936 Calculation of Cumulative Net Investment Loss (CNIL) is used to help calculate your capital gains deduction (line 25400), which is a deduction that you can claim against taxable capital gains you realized from the disposition of certain capital properties. 

It doesn't directly reduce your Taxable capital gains (Line 12700).

[peter-m]

How to claim CNIL deduction against taxable capital gains ?

[TurboTax_Susan]

To claim the Capital Gains Deduction you would fill out form T657.

[peter-m]

Could you please provide instructions how to fill out T657 form using EasySteps method.

BTW,

If this cannot be done via EasySteps, I strongly suggest adding this feature to the next 2026 TurboTax release. The program should ask user if he wants to claim Capital Gain Deductions using CNIL and then ask for the amount to be applied. 

[TurboTaxAniqua]

Your feedback is noted.The Form T657 acts as a calculation worksheet, but in TurboTax, you don't typically "fill out" the form manually in EasyStep. Instead, you enter the raw data into the Capital Gains and Investment Profile sections, and the software "builds" the T657 in the background.

That form is a worksheet; It cannot be  found in Easy Step
https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/t657/t657-25e.pdf

Click on the Find icon (magnifying glass) in the top right menu.

Type "Investments" or "Capital Gains" and select it from the list, then click Go.

On the Your Capital Gains Profile page, you must check the box for "Qualified small business corporation shares" or "Qualified farm and fishing property." *Note: The T657 will not appear if you only select "stocks, bonds, or mutual funds," as standard stock gains do not qualify for this deduction.

Enter the details of your sale (Proceeds, Adjusted Cost Base, and Outlays).

Once the software recognizes a gain on "Qualified" property, it will automatically trigger a series of questions regarding your Lifetime Capital Gains 

Complete the T657 Questions:

The interview will ask if you have claimed this deduction in prior years. You will need your Notice of Assessment or previous tax returns to enter the "Total capital gains deductions claimed in prior years."

The software will then ask for CNIL (Cumulative Net Investment Loss) data. This is where you enter interest expenses or investment losses from prior years that might reduce your eligible deduction for the current year.

[peter-m]

Once I entered the details of the sale of shares under the "Your Capital Gain Profile" page as suggested, the amount owning doubles. This is if the TurboTax treats this as additional Income that is fully taxable. This should not work like this. This is what prompt my post in the first place. Please see the example that I have provided at the beginning. I have tried to follow your instructions but end up nowhere. The CRA assessment notes does not provide Total capital gains deductions from previous years. Only unused CNIL is listed there.  Also, I have used the TurboTax in previous years and always import data and would expect that TurboTax has and carries over this information to the current tax year from all previous years. 

I strongly suggest adding the following to the next year TurboTax. 
If the imported by TurboTax data from year 2024 has the CNIL amount that is carried over to current tax year and the user reports capital gains for current year, the TurboTax should ask simple question. Do you want to use your reported loses from your previous year to offset the capital gains? If the answer is "Yes" the TurboTax should ask for the $ amount to be applied. While this question is asked the TurboTax should display the CNIL amount that was imported so the user can see what is the maximum amount that is available for deduction. Once the claimed amount is entered, the estimated amount owing should be reduced confirming that the deduction has been effectively applied.

[TurboTaxAniqua]

Your feedback is extremely important to us. We have taken note of it and forwarded it to our development team so that they can look into your suggestions. We appreciate your feedback!