Re: Paragraph 111(8)(b) - Non-Capital Loss Calculations
This is in reply to your letter of November 27, 1990 concerning the interaction of the capital gains deduction under section 110.6 of the Act and the determination of a non-capital loss under paragraph 111(8)(b).
You have asked whether or not an individual may claim the maximum capital gains deduction, thus increasing the amount of a non-capital loss under paragraph 111(8))(b) of the Act in that year, notwithstanding the fact that the net income in insufficient to absorb the section 110.6 deduction.
We have now had an opportunity to review the interaction of these provisions and are of the view that an individual is entitled to claim a capital gains deduction on form T657 for the full amount of the eligible taxable gains in that year, even though the individual's net income before the deduction is nil or less than the amount of the capital gains deduction. The individual can thereby increase the amount of any non-capital loss for the year determined under paragraph 111(8)(b) of the Act.
We trust this information will be of assistance to you.
Yours truly,
for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch