CAN I CLAIM NON CAPITAL LOSSES IN PERSONAL TAXES

[ayseleren18]

Thank you for choosing TurboTax,

Yes, you can claim non-capital losses.

Non-capital losses can be applied to other income. If your small business venture resulted in a loss of $5000, that loss can be applied to the income from your other sources such as employment, RRSP income, interest amounts, etc.

Similar to capital losses, non-capital losses can be carried back three years and applied to prior years’ returns using the Form T1A. Carrying a non-capital loss forward for future use is a bit more complex as different rules apply for different types of losses.

As per CRA, you can reduce your taxable income by deducting any unapplied non-capital losses you reported on your returns for the last 7 years or any unapplied farming or fishing losses for the last 10 years. To carry a non-capital loss back to 2017, 2018, or 2019, complete Form T1A, Request for Loss Carryback, and include it with your 2020 income tax and benefit return (or send it separately). Do not file an amended return for the year to which you want to apply the loss.

Please visit the website of Capital Loss vs. Non-Capital Loss: What They Mean in Taxes to learn more.

[GrahamS1]

Will Turbo tax standard automatically populate this T1A for your tax filing if it deems you to have a Non-Capital Loss?

For example: No current year employment income, and investment interest expense/carrying charges greater than passive investment income. 

[TurboTaxSusan]

@grahamstarko

Yes, TurboTax will create a T1A for you, but you must indicate that you want to use the loss. 

If you want to apply a loss from the current tax year to prior years using TurboTax Online, use the “Find” tool to search for “loss”. Select “Losses” from the list and then click the “Go” button. Check off “Request for Loss Carryback” at the bottom of the “Your Losses Profile for 2020” and click “Continue” until you get to the Loss Carryback page that applies to you. 

[cpam532348]

why does the non capital loss of 2023 carry back against my 2022 income creating a refund on my return? 

[TurboTaxBrenda]

As per the CRA: When you apply a net capital loss back to a previous year's taxable capital gain, it will reduce your taxable income for that previous year. However, your net income, which is used to calculate certain credits and benefits, will not change.

If you carry your 2023 net capital loss back to 2020, 2021 or 2022, you do not have to adjust the amount of the 2023 net capital loss since the inclusion rate is the same for these years.

To apply a 2023 net capital loss to 2020, 2021, or 2022, complete "Section III – Net capital loss for carryback" on Form T1A, Request for Loss Carryback. This form will also help you determine the amount you have left to carry forward to future years. Do not file an amended income tax and benefit return for the year to which you want to apply the loss.

Thank you for choosing TurboTax.