Capital losses don't disappear after you incur them. In Canada, you can carry forward unused capital losses indefinitely to offset capital gains in future years, which may help reduce your tax bill over time. The CRA allows you to apply losses backwards up to three years as well, meaning you can claim a loss against gains you already reported. This flexibility makes understanding loss carryforwards essential for long-term investors. A capital loss carryforward occurs when your total capital losses exceed your total capital gains in a given tax year. Rather than losing that deduction entirely, you can save it and apply it against capital gains in future years. This is one of the most valuable tax tools available to Canadian investors. The mechanics are straightforward: if you realize a $5,000 capital loss this year but only have $2,000 in capital gains, you have a $3,000 unused loss that can be carried forward indefinitely.
No, capital loss carryforwards never expire. You can apply them to capital gains in any future year, indefinitely. However, they can only offset capital gains, not other income.
No, capital losses can only offset capital gains. They cannot be applied against employment income, business income, or other types of income, with very limited exceptions.
You can carry losses back up to three tax years to offset capital gains you previously reported, potentially resulting in a tax refund. You can carry losses forward indefinitely.
Yes, your Notice of Assessment shows your available loss carryforward balance. Keep your own records as well, especially if you've claimed losses in multiple years, to ensure accuracy when filing.
No, losses inside registered accounts like a TFSA or RRSP cannot be claimed. Only losses from non-registered investments can be carried forward to offset future capital gains.