Income Tax Act — I-3.3 111
ear (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 the particular year, and C is the fraction required to be used under section 38 in respect of the taxpayer for the loss year; (b) where the taxpayer is an individual, the least of (i) $2,000, (ii) the taxpayer’s pre-1986 capital loss balance for the particular year, and (iii) the amount, if any, by which (A) the amount claimed under paragraph 111(1)(b) in respect of the taxpayer’s net capital losses for the particular year exceeds (B) the total of the amounts in respect of the taxpayer’s net capital losses that, using the formula in subparagraph 111(1.1)(a)(ii), would be required to be claimed under paragraph 111(1)(b) for the particular year to produce the amount determined under paragraph 111(1.1)(a) for the particular year; and (c) the amount, if any, that the Minister determines to be reasonable in the circumstances for the particular year and after considering the application to the taxpayer of subsections 104(21.6), 130.1(4), 131(1) and 138.1(3.2) as they read in their application to the taxpayer’s last taxation year that began before November 2011. Year of death (2) Where a taxpayer dies in a taxation year, for the purpose of computing the taxpayer’s taxable income for that year and the immediately preceding taxation year, the following rules apply: (a) paragraph 111(1)(b) shall be read as follows: “111(1)(b) the taxpayer’s net capital losses for all taxation years not claimed for the purpose of computing the taxpayer’s taxable income for any other taxation year;”; and (b) paragraph (1.1)(b) is to be read as follows: “(b) the amount, if any, by which (i) the amount claimed under paragraph (1)(b) in respect of the taxpayer’s net capital losses for the particular year exceeds the total of (ii) all amounts in respect of the taxpayer’s net capital losses that, using the formula in subparagraph (a)(ii), would be required to be claimed under paragraph (1)(b) for the particular year to produce the amount determined under paragraph (a) for the particular year, and (iii) all amounts each of which is an amount deducted under section 110.6, 110.61 or 110.62 in computing the taxpayer’s taxable income for a taxation year, except to the extent that, where the particular year is the year in which the taxpayer died, the amount, if any, by which the amount determined under subparagraph (i) in respect of the taxpayer for the immediately preceding taxation year exceeds the amount so determined under subparagraph (ii).” Limitation on deductibility (3) For the purposes of subsection (1), (a) an amount in respect of a non-capital loss, restricted interest and financing expense, restricted farm loss, farm loss or limited partnership loss, as the case may be, for a taxation year is deductible, and an amount in respect of a net capital loss for a taxation year may be claimed, in computing the taxable income of a taxpayer for a particular taxation year only to the extent that it exceeds the total of (i) amounts deducted under this section in respect of that non-capital loss, restricted interest and financing expense, restricted farm loss, farm loss or limited partnership loss in computing taxable income (or, in the case of a restricted interest and financing expense, in computing a non-capital loss) for taxation years preceding the particular taxation year, (i.1) the amount that was claimed under paragraph 111(1)(b) in respect of that net capital loss for taxation years preceding the particular taxation year, (ii) amounts claimed in respect of that loss under paragraph 186(1)(c) for the year in which the loss was incurred or under paragraph 186(1)(d) for the particular taxation year and taxation years preceding the particular taxation year, and (iii) amounts claimed in respect of that limited partnership loss in computing taxable income for taxation