Subject: 19(1) Calculation of Non-Capital Loss
Your memorandum of September 12, 1990 requested our comments concerning whether the capital gains deduction is restricted to the amount of net income in the year or whether it may be deducted to the full extent of the taxable capital gain in the year, thus creating a non-capital loss.
After careful consideration of the matter and consultation with Current Amendments Division and Legal Branch, we have concluded that an individual may claim a capital gains deduction under section 110.6 in computing taxable income, notwithstanding the fact that there is insufficient net income to absorb the deduction. The amount so "deducted" may thus be added in calculating any non-capital loss under paragraph 111(8)(b) of the Act.
In the case submitted by the Edmonton D.O. in their July 11, 1990 memorandum, the taxpayer
24(1)
If we can be of any further assistance in this matter, please do not hesitate to contact us.
B.W. DathDirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
c.c. Mr. J.M. Legault Mrs. P.M. McNally Mr. W.S. Hume