Line 34 - Net capital losses of other years
Generally, if the trust's allowable capital losses are more than its taxable capital gains in a year, the difference is a net capital loss for that year. You can use the net capital loss to reduce the trust's taxable capital gains in any of the three preceding years or in any future year.
Within certain limits, you can deduct all or a portion of the trust's net capital losses of other years that have not already been claimed.
For more information, see Guide T4037, Capital Gains.
Listed personal property losses - Losses on listed personal property (LPP) can be applied only against LPP gains. Claim the unused portion of an LPP loss from a previous year against a current-year LPP gain on line 8 of Schedule 1, or on line 8 of Form T1055, Summary of Deemed Dispositions (2002 and later tax years), if applicable. For more information, see "Lines 7 to 9 - Listed personal property" on page 45.
The unused portion of an LPP loss can be carried back three years and forward seven years, and applied against LPP gains in those years.
For information on how to carry back an unused net capital loss or an LPP loss, see the next section.
Form T3A, Request for Loss Carryback by a Trust
Use this form to carry an unused loss back to a previous year. You have to make your request on or before the due date of the T3 return for the year in which the trust incurred the loss. You can file the completed form with the current year's T3 return or, where applicable, file it together with the Form T3-ADJ, T3 Adjustment Request.
If the loss was not deducted fully in a previous year, keep a schedule of the unused portion so you can deduct it in future years. Always apply the oldest loss within a class of losses first. For example, apply a 2020 non-capital loss before a 2021 non-capital loss.
A non-capital loss carryback is used to reduce the taxable income of the trust in a previous year. A net capital loss carryback is deductible in computing a trust's taxable income for a previous tax year only to the extent of the trust's taxable capital gains in that previous year.
If you allocated income or designated taxable capital gains to beneficiaries in a previous year and you subsequently carry back a loss to that year, the trust may make a late subsection 104(13.1) or (13.2) designation only where the application of the loss results in nil taxable income for the trust.
Filings to amend the tax position of the trust and the beneficiary are as follows:
-
the trust would file Form T3A, Request for Loss Carryback by a Trust in connection with the loss year to request the loss be carried back to the previous year
-
the trust would file Form T3-ADJ, T3 Adjustment Request for the previous year to reflect a late subsection 104(13.1) or (13.2) designation so as to amend the trust's T3 return
-
the trust would issue amended T3 slips to the beneficiary for that previous year, reducing the income allocated
-
the beneficiaries would file a Form T1-ADJ, T1 Adjustment Request to reflect the revised T3 slip and to amend the T1 return
The CRA will only reassess beneficiaries' returns if the tax years to which they relate and the tax year of the trust to which the loss will be applied are not statute-barred.
The trust must file Forms T3A and T3-ADJ together as they must be processed concurrently.
If you apply a net capital loss carryback, a non-capital loss may be increased or created if the loss was previously used to reduce the amount of taxable capital gains in the year of the carryback.
For more information, see archived Interpretation Bulletin IT-232, Losses - Their Deductibility in the Loss Year or in Other Years.
|
|
|