Canadian Capital Gains 2007 - Capital Loss 2008?? Help?

Question

Here is my situation. All numbers are made to be easy for example. Assuming I made $100,000 last year 2007 in capital gains. 50% was tax free, and I am in the 50% tax bracket both years, therefore I paid $25,000 in capital gains tax last year 2007.

Now this year, not so good, I have $25,000 in capital loss. What can I get back as a refund on this capital loss. I am hoping the full $25,000 I paid last year, however seems too good to be true. I imagine I would get back $12,500 or is it $6,250 refund?

Answer 1

The loss incurred in 2008 can be carried back to 2007. The net effect would be that you wouldn't be paying taxes on the $25,000 * 50%. So your taxable income on the 2007 return would be reduced by 12,500, and you'd get back approx $6,250.

When you file this years return, file out Schedule 3 and report the loss at the appropriate place. File a copy of form T1A with the return and assign the loss to 2007. The CRA will reassess your 2007 return separately.