CRA indicates that excess s. 60 deductions disappear

CRA indicated that where deductions under s. 60 (e.g., the deduction under s. 60(s) arising on repayment of a policy loan to the extent of previous-policy loan inclusions) exceed the taxpayer’s income for the year, “such excess amount cannot be deducted by the taxpayer in any other taxation year,” e.g., as a non-capital loss. There is no non-capital loss as defined in s. 111(8) given that s. 60 deductions (per s. 4(3)) do not give rise to losses from a source and given that s. 60 deductions cannot give rise to a negative amount under s. 3(c).

Neal Armstrong. Summaries of 3 May 2022 CALU Roundtable Q. 5, 2022-0928831C6 under s. 60(s) and s. 111(8) – non-capital loss – A.