What are non-capital losses and do they expire?

The tax term for business losses is non-capital losses.  Non capital losses can be used to reduce taxable income from a prior year or a subsequent year.  If they are not used within a certain time period, then the non-capital losses expire.  The time period for utilizing non-capital losses depends on the taxation year in which the losses arose:

• For taxation years ending before March 23, 2004 non capital losses can be carried back (3) three years and carried forward (7) seven year
• Non-capital losses incurred after March 23, 2004 but before 2006 can be carried forward (10) ten years and carried back (3) three years.
• Non-capital losses incurred after 2006 can be carried forward (20) twenty years and carried back three (3) years.

ABOUT THE AUTHOR

ALLAN MADAN

CA.CPA.CGA

Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.

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