How can my stock losses be used to lower taxes? Sep 17th

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How can my stock losses be used to lower taxes?
Q. I just received a report from my brokerage noting the value of one of my investments was cut in half. Can this loss report be used to lower taxes and how does that work? I understand there is also a specific form used for Canada Revenue, but I’m not sure which ones I need.  Thanks, Leslie
A. The loss on stocks (and any other capital asset) is a capital loss. Capital losses may be used to reduce capital gains in the year of sale, any of the immediate three years, or any future year. Capital losses cannot decrease your income from any other source, except in the year that you die.
So, if you experience a capital loss in the current tax year, first you use the loss to reduce any capital gains reported in the year. The reporting is done on Schedule 3 of your tax return.
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Then, you may carry unabsorbed losses back to any of the previous three years to reduce capital gains reported in those years. Use form T1A Loss Carry Back to do so.
If the prior year gains are not sufficient to absorb the loss, any left-over amount can be carried forward indefinitely and applied to any capital gain reported in those years…

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