# Capital Loss Carryover question when one becomes non-resident



## jerryhung (Mar 28, 2011)

I had this thought, thanks for any insights in advance

If one has Capital Loss carryover amount from stock losses (which one can carry forward *forever*? or forever only as a Resident?), what happens when one becomes non-resident (for tax purpose)?
Does one HAVE TO use it up (i.e. hopefully have some capital gains to use it)
or lose it completely, even when one may come back to Canada in future and become resident again?
e.g. say I have 50K capital loss carryover, then I move overseas for 5 years and become non-resident, but come back after 5 years again... what would happen?

I know for Capital Gains, becoming non-resident = disposition of properties = file capital gain taxes (if any); so the reverse may be true? although Disposition of capital loss is still a loss?


I Google'ed it and only thing I can find is this from this link (Canadians moving to US to work)
http://www.americanlaw.com/ustxperm.html


> Deductions Allowed While a Resident of Canada
> Loss Carryovers
> 
> Non-capital losses and net capital losses incurred in Canada in other years may be deducted subject to limitations.
> ...


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## OhGreatGuru (May 24, 2009)

I do not know the answer to whether you can carry forward a capital loss for a number of years until you (may) return to become a Canadian taxpayer again. However, it seems to me one would be better to try to use it up before one left:
1. If one still owns assets, there will be a deemed disposition on emigrating that has to be declared on the tax return for the year of leaving. If this deemed disposition results in a capital gain, apply the loss carryover to it.
2. Capital losses can be applied to any capital gains in the three previous years (See T4037 for details.)

PS. In a bulletin dealing with non-residents who are subject to Canadian taxes (but not specifically dealing with emigrants) CRA does state that capital losses can be carried forward indefinitely. So my guess would be that the same applies to emigrants. http://www.cra-arc.gc.ca/E/pub/tp/it262r2/it262r2-e.html
See Par.14 (b)


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## jerryhung (Mar 28, 2011)

OhGreatGuru said:


> I do not know the answer to whether you can carry forward a capital loss for a number of years until you (may) return to become a Canadian taxpayer again. However, it seems to me one would be better to try to use it up before one left:
> 1. If one still owns assets, there will be a deemed disposition on emigrating that has to be declared on the tax return for the year of leaving. If this deemed disposition results in a capital gain, apply the loss carryover to it.
> 2. Capital losses can be applied to any capital gains in the three previous years (See T4037 for details.)
> 
> ...


Thanks, I'll probably also give CRA a call to confirm as well
I know BENEFITS for easily tied to Residency - TFSA, RRSP, RESP, etc... but I don't know if the benefit of "indefinite capital loss carryover" is residency-tied. 

I wish I don't have any capital loss to carry, but sadly I do have large ones due to very bad luck (Sino-Forest, BlackBerry, enough said)


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## jerryhung (Mar 28, 2011)

called CRA, took them 20 minutes with Research officer to confirm the "good news"

Capital Loss carryover indefinitely, *resident or not*


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