Lines 217 and 228 - What happens when you have an ABIL?

You can deduct your ABIL from your other sources of income for the year. If your ABIL is more than your other sources of income for the year, include the difference as part of your non-capital loss for 2011.

You can carry a non-capital loss arising in 2003 or prior years, back three years and forward seven years. You can carry a non-capital loss arising in a tax year ending after March 22, 2004 through December 31, 2005, back 3 years and forward 10 years.

Although you can generally carry a non-capital loss arising in tax years ending after 2005, back 3 years and forward 20 years, this extension does not apply to a non-capital loss resulting from an ABIL. Instead, a non-capital loss resulting from an ABIL that has not been used within ten tax years will become a net capital loss in the eleventh year.

To carry a non-capital loss back to 2008, 2009, or 2010, complete Form T1A, Request for Loss Carryback, and include it with your 2011 income tax and benefit return (or send it to us separately). Do not file an amended return for the year to which you want to apply the loss.

If you could not deduct your ABIL arising in 2003 as a non-capital loss by the end of the seventh year (2010), the unapplied part becomes a net capital loss in 2011. You can use this loss to reduce your taxable capital gains in 2011 or any future year.

For example, if you had an ABIL in 2003 that became a non-capital loss and you were not able to deduct it in the three years before 2003 or the seven years after 2003 You could now use the loss to reduce your taxable capital gains in 2011 or any year after.

The unapplied part of your non-capital loss resulting from an ABIL arising in tax years ending after March 22, 2004, will become a net capital loss in the eleventh year.

Note
Any ABIL that you claim for 2011 will reduce the capital gains deduction you can claim in 2011 and in future years.

Forms and publications

• Guide T4037, Capital Gains
• Form T1A, Request for Loss Carryback
• IT232, Losses - Their deductibility in the loss year or in other years
• IT484, Business investment losses

Related topics

• Line 252 - Non-capital losses of other years
• Line 253 - Net capital losses of other years
• Line 254 - Capital gains deduction