T3Trust capital loss carryback

marclamontagne · ‎October 21, 2022

Hi Everyone,

Re: Joint Partner Trust

The T3trust had a capital gain in 2021 and was distributed to the Partners via a T3slip and reported on their T1s. The trust will have a capital loss in 2022, and I would like to carry it back to offset the Partners' 2021 gain. I have never done this before, but I understand the loss should flow through to the 2022 T3slip. Though when I tested this, the loss wasn't carrying through to the slip. Do I need to override something?

ProFile Duncan · ‎November 01, 2022

Hi Marc

I agree there are trust types that can allocate the loss to beneficiaries as per the CRA guide:

Unfortunately there is no direct way to accomplish this in ProFile. You will have to override. You cannot override capital losses on the beneficiary form, so, you will need to override on the allocation worksheet, like this for example:

Hope this helps

View solution in original post

Mario B · ‎October 26, 2022

based on this post, it looks like its not possible. see section on trusts

https://www.millerthomson.com/en/publications/communiques-and-updates/wealth-matters/april-14-2020-w...

Trusts

A trust can only carry back a net capital loss if the taxable capital gain was subject to tax in the trust. This is not typically the case as it is usual for a trustee to allocate taxable capital gains to the beneficiaries. Thus, a trust that realizes a capital loss will usually only be able to carry the loss forward and use it to offset capital gains in the future.

Regards,

marclamontagne · ‎October 27, 2022

Hi Mario B,

Then as an alternative, I believe a Joint Partner Trust can flow the capital loss to the beneficiaries' T3slips?

Marc

ProFile Duncan · ‎November 01, 2022

Hi Marc

I agree there are trust types that can allocate the loss to beneficiaries as per the CRA guide:

Unfortunately there is no direct way to accomplish this in ProFile. You will have to override. You cannot override capital losses on the beneficiary form, so, you will need to override on the allocation worksheet, like this for example:

Hope this helps