Canada Revenue Agency
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Farm Losses
When the expenses for your farming business are more than the income for the year, you have a net loss. However, before you can calculate your net farm loss for the year, you may have to increase or decrease the loss by certain adjustments. These adjustments are the Optional inventory adjustment and the Mandatory inventory adjustment. See Line 9941 - Optional inventory adjustment and Line 9942 - Mandatory inventory adjustment in Chapter 3 of guide T4003, Farming Income.
The amount of the net farm loss you can deduct depends on the nature and extent of your business. Your farm loss may be:
- fully deductible (farming was your chief source of income)
- restricted (partly deductible) (farming was not your chief source of income)
- non deductible (there was no intent to make a profit)
To carry back a farming loss up to 3 years, complete Form T1A, Request for Loss Carryback, and attach it to your current year tax return. Do not file amended returns for any of those three years.
If you wish to apply a farming loss from any of the 10 previous years to income in the current year, enter the loss on Line 252 - Non-capital losses of other years of your current income tax and benefit return. Your available losses are generally shown on your Notice of Assessment. You can also get this information from My Account.
Note
Farm losses incurred after 2005 can be carried forward up to 20 years.
For more information, including inventory adjustments, on losses that you can carry back or carry foward and how they are calculated and applied, see Chapter 6 of guide T4003, Farming Income. Also, see Interpretation bulletins IT-232, Losses - Their Deductibility in the Loss Year or in Other Years and IT-322, Farm Losses.
Forms and publications
- Guide T4003, Farming Income
- Form T1A, Request for Loss Carryback
- Interpretation bulletin IT-232, Losses - Their Deductibility in the Loss Year or in Other Years
- Interpretation bulletin IT-322, Farm Losses
