What makes a loss usable
The rules treat a loss differently from a gain. An allowable capital loss is applied first against taxable capital gains in the same year. It does not reduce salary, business income or interest, so a loss on shares cannot be used to lower your employment income.
Not every loss counts. A loss on personal-use property, such as a car for personal driving, generally cannot be deducted. Losses on listed personal property can only be applied against gains from listed personal property. A loss denied as a superficial loss cannot be claimed in the year of the sale. Allowable business investment losses follow separate rules and can in some cases be deducted against other income.
An illustrative example
Suppose in one year you sell Share A for a $1,000 gain and Share B for a $3,000 loss. Half of each is included, so the taxable capital gain is $500 and the allowable capital loss is $1,500. The loss wipes out the gain and leaves $1,000 unapplied.
That $1,000 is your net capital loss for the year. You cannot deduct it from other income, but you can apply it to taxable capital gains in any of the three previous years or any future year. The figures are illustrative and ignore commissions.
Carrying a net capital loss back or forward
To carry a loss back, you complete Form T1A and choose the year or years to apply it to, rather than filing an amended return. Carrying a loss back reduces taxable income for that earlier year, but not net income, so credits tied to net income do not change. A carryback can also reduce a capital gains deduction you claimed in that year or a later one.
To carry a loss forward, you claim it on line 25300 in a year with a taxable capital gain. Earlier years’ losses are applied before later ones, and an older loss is adjusted to today’s inclusion rate, which is one-half. The proposed increase to two-thirds was cancelled. Your notice of assessment shows the balance.
Mistakes and what to discuss with your accountant
Common mistakes include trying to claim a loss on a home, forgetting that a gain or loss must be reported on Schedule 3, and not keeping the cost records needed to prove the loss. Net capital losses are not entered on line 12700, so check that the balance appears on your notice of assessment.
Ask whether a carryback or a carry-forward is more useful for you, whether any loss may be superficial, and how losses on shares of a private company would be treated. Bring statements for every account, including those held with a spouse.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- Capital lossesCanada Revenue Agency
- Calculating and reporting your capital gains and lossesCanada Revenue Agency
- What’s new for corporationsCanada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.