Non Capital Loss rules: Non-capital losses can be carried forward for up to how many years?

Non Capital Loss rules: Non-capital losses can be carried forward for up to how many years?

• A. 20 years
• B. 3 years
• C. 5 years
• D. 1 year

Answer: (A)

Non-capital losses are losses from sources other than capital gains that you can use to offset other taxable income in different years. The tax rules allow you to apply these losses to offset income in future years for up to twenty years, and to recover taxes paid in the prior three years by carrying the loss backward. This forward window of twenty years is what lets a business smooth out profits and losses over time. Therefore, the maximum period to carry non-capital losses forward is twenty years.

Non-capital losses are losses from sources other than capital gains that you can use to offset other taxable income in different years. The tax rules allow you to apply these losses to offset income in future years for up to twenty years, and to recover taxes paid in the prior three years by carrying the loss backward. This forward window of twenty years is what lets a business smooth out profits and losses over time. Therefore, the maximum period to carry non-capital losses forward is twenty years.