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Tax Questions
I've got a quick tax question for you accountants out there. Here's my situation:
I was a student with very little declared income (worked mostly cash jobs during the summer). Pretty much, I only made $900 bucks the whole year. I did however sell some stocks I had at a loss.
Basically, I was wondering if I can carry over the losses to be used in a year where it would actually help me.
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you can carry it 3 years back or forward indefinitely
http://www.cra-arc.gc.ca/tax/individ...mary-pf-e.html
Last edited by topazdude; 02-29-2008 at 12:58 AM.
Registered User
a
More importantly, capitol losses can ONLY be offset against capital gains and not other forms of income. So you can only use this to offset money you make off stocks or flipping a house or something of that nature.
Registered User
Remember to still do a tax return even if you made basically nothing and didn't pay and taxes.
Registered User
Okay cool, so do I still file it on this years return or do it on the year that i have capital gains?
You are Stupider Than Me!
Similar question I think as OP, but here goes anyhow...
Pretend (hahaha) my capital losses on stock this year exceed my net income. *YIKES*
Therefore, all tax deducted from my salary will be refunded.
Because the capital loss on stock was so extreme, all the loss isn't required to be reported to reduce my net income to zero.
Example, I made $10000.00 salary this year. I lost $25000.00 on the stock market. I only need to use $10000.00 of my stock losses to negate my income. Inclusion rate is 1/2 so I can claim $12500.00 right?
Can I carry forward that additional $2500.00 in losses to future years AND/OR can I actually refile my previous years return and use that $2500.00 loss in a reassessment of sorts to get more tax money back?? LOL
And here's another one...is interested paid on a line of credit tax deductible. IE, suppose you pay $700 a month in interest (example LOL) can you use that $8400/yr as some kind of deduction or is that permitted only on investment loans etc?
First Gear
Since you pretend made $10k last year, you are only paying pretend taxes on $400 of income since your first $9600 is basically tax free. Your capital losses can only be used to offset capital gains.
But yes, any unused capital losses can be carried forward indefinitely, or carried backwards by 3 years.
To deduct interest expenses, you must be able to prove that the money was used for a legitimate investment. ie, you can't take a LOC, use it to go on vacation, and claim the interest against your income.
edit: misread what you typed...
Last edited by Altezza; 03-03-2008 at 04:17 AM.
Registered User
Capital loss can only applied against capital gain. Not net income. One way capitalize on loss is via RRSP.Originally posted by Z_Fan
Similar question I think as OP, but here goes anyhow...
Pretend (hahaha) my capital losses on stock this year exceed my net income. *YIKES*
Therefore, all tax deducted from my salary will be refunded.
Because the capital loss on stock was so extreme, all the loss isn't required to be reported to reduce my net income to zero.
Example, I made $10000.00 salary this year. I lost $25000.00 on the stock market. I only need to use $10000.00 of my stock losses to negate my income. Inclusion rate is 1/2 so I can claim $12500.00 right?
Can I carry forward that additional $2500.00 in losses to future years AND/OR can I actually refile my previous years return and use that $2500.00 loss in a reassessment of sorts to get more tax money back?? LOL
And here's another one...is interested paid on a line of credit tax deductible. IE, suppose you pay $700 a month in interest (example LOL) can you use that $8400/yr as some kind of deduction or is that permitted only on investment loans etc?
If you have enough contribution room left, sell you stock and buy the same amount back in your RRSP. So you realize the loss to claim on later gains. And you are still holding the same stock/mf in your RRSP portfolio.
While loss can be carry forward indefinitely, there's is no guarantee government won't change the law on it. So you should claim that loss ASAP.
The only way I would incur that big loss is if you have big gain somewhere else you need to capitalize and the stock you're losing on has no chance of a rebound (like Nortel).
As your second question, I think it's possible but check with your accountant on paper work needed.
You are Stupider Than Me!
OK. Another tax question then.
Suppose I want to move. I sell my house for $125k. But I bought my house for $50k. Do I have to claim capital gain of $75k on my house even though it is my primary residence, not an investment property, and I will be buying a new home to replace it?
Registered User
^ nope. You don't need to pay any taxes on the said transaction. You're absolutely right on the primary residence part but be careful, if you buy and sell your "primary residence" enough times a year, it'll be deemed as income and you'll be taxes on the gains.
"Science without religion is lame, religion without science is blind." - Albert Einstein
Registered User
These guys answered everything except for the interest on the LOC part. And like your capital losses, the interest can only be deducted against income you make on the money you borrowed. Not against your employement income.
But best advice if you have a fairly complicated return to file (like it sounds like you have) is to go to an accounting firm as they will have the expertise to deal with it and the insurance to cover their ass if they screw up.
First Gear
You have to wait it out 30 days before you can do this otherwise you'll trigger superficial loss rules.Originally posted by Xtrema
Capital loss can only applied against capital gain. Not net income. One way capitalize on loss is via RRSP.
If you have enough contribution room left, sell you stock and buy the same amount back in your RRSP. So you realize the loss to claim on later gains. And you are still holding the same stock/mf in your RRSP portfolio.
Registered User
^I'll be curious to see what happens here. I just went through the same thing with an RRSP. I transferred in a stock at a loss from another account. I'm hoping for the Capital loss and RRSP contribution. I think it would be stupid to deny the loss as you only get the RRSP contribution for the value of the shares on teh day they were transfered, not when you originally bought them.
"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered."
-Thomas Jefferson 1802
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Yes, 30days, forgot about that part.Originally posted by Altezza
You have to wait it out 30 days before you can do this otherwise you'll trigger superficial loss rules.
Registered User
ya they revised it this year u can deduct an additional 1000 for employment income so its pretty much tax over 10600Originally posted by Altezza
Since you pretend made $10k last year, you are only paying pretend taxes on $400 of income since your first $9600 is basically tax free. Your capital losses can only be used to offset capital gains.
But yes, any unused capital losses can be carried forward indefinitely, or carried backwards by 3 years.
To deduct interest expenses, you must be able to prove that the money was used for a legitimate investment. ie, you can't take a LOC, use it to go on vacation, and claim the interest against your income.
edit: misread what you typed...
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