Tax Planning with Losses
Carrying capital losses backwards or forwards
- Allowable capital losses may be carried back against taxable
capital gains realized in the last 3 years
- Capital losses realized in 2020 can be carried back and deducted against capital gains realized in 2019, 2018, and 2017
- Allowable capital losses may also be carried forward indefinitely to offset capital gains in future years
- Superficial loss rules deny the capital loss if the taxpayer or an affiliated person (which includes a spouse and a corporation controlled by the taxpayer) acquires an identical security within 30 days of the disposition
Income Splitting Opportunities
Attribution
- Attribution rules apply when an individual gifts, or loans without interest, funds to certain family members for the purpose of earning income from property or capital gains
- When funds are gifted to a spouse, income from property (including dividends and interest) and capital gains derived from those funds are attributed to the individual who made the gift
- When funds are gifted to a minor child, income from property (but not capital gains) derived from those funds are attributed to the individual who made the gift
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