Income Tax Act — I-3.3 111
Losses deductible 111 (1) For the purpose of computing the taxable income of a taxpayer for a taxation year, there may be deducted such portion as the taxpayer may claim of the taxpayer’s Non-capital losses (a) non-capital losses for the 20 taxation years immediately preceding and the 3 taxation years immediately following the year; Restricted interest and financing expenses (a.1) restricted interest and financing expenses for taxation years preceding the year, but no amount is deductible for the year in respect of restricted interest and financing expenses except to the extent of the amount determined by the formula A + B where A is the amount that would be the taxpayer’s excess capacity for the year if the amount determined for C in paragraph (b) of the definition excess capacity in subsection 18.2(1) were nil, and B is the total of all amounts, each of which is an amount of received capacity (as defined in subsection 18.2(1)) of the taxpayer for the year; Net capital losses (b) net capital losses for taxation years preceding and the three taxation years immediately following the year; Restricted farm losses (c) restricted farm losses for the 20 taxation years immediately preceding and the 3 taxation years immediately following the year, but no amount is deductible for the year in respect of restricted farm losses except to the extent of the taxpayer’s incomes for the year from all farming businesses carried on by the taxpayer; Farm losses (d) farm losses for the 20 taxation years immediately preceding and the 3 taxation years immediately following the year; and Limited partnership losses (e) limited partnership losses in respect of a partnership for taxation years preceding the year, but no amount is deductible for the year in respect of a limited partnership loss except to the extent of the amount by which (i) the taxpayer’s at-risk amount in respect of the partnership (within the meaning assigned by subsection 96(2.2)) at the end of the last fiscal period of the partnership ending in the taxation year exceeds (ii) the total of all amounts each of which is (A) the amount required by subsection 127(8), 127.44(11), 127.45(8), 127.48(12), 127.49(8) or 127.491(12) in respect of the partnership to be added in computing the investment tax credit, the CCUS tax credit (as defined in subsection 127.44(1)), the clean technology investment tax credit (as defined in subsection 127.45(1)), the clean hydrogen tax credit (as defined in subsection 127.48(1)), the CTM investment tax credit (as defined in subsection 127.49(1)) or the clean electricity investment tax credit (as defined in subsection 127.491(1)) of the taxpayer for the taxation year, (B) the taxpayer’s share of any losses of the partnership for that fiscal period from a business or property, or (C) the taxpayer’s share of (I) the foreign resource pool expenses, if any, incurred by the partnership in that fiscal period, (II) the Canadian exploration expense, if any, incurred by the partnership in that fiscal period, (III) the Canadian development expense, if any, incurred by the partnership in that fiscal period, and (IV) the Canadian oil and gas property expense, if any, incurred by the partnership in that fiscal period. Net capital losses (1.1) Notwithstanding paragraph 111(1)(b), the amount that may be deducted under that paragraph in computing a taxpayer’s taxable income for a particular taxation year is the total of (a) the lesser of (i) the amount, if any, determined under paragraph 3(b) in respect of the taxpayer for the particular year, and (ii) the total of all amounts each of which is an amount determined by the formula A × B/C where A is the amount claimed under paragraph 111(1)(b) for the particular year by the taxpayer in respect of a net capital loss for a taxation year (in this paragraph referred to as the “loss year”), B is the fraction that would be used for the particular year under section 38 in respect of the taxpayer if the taxpayer had a capital loss for