Allowable Business Investment Loss (ABIL)
Business Investment Loss
What is a Business Investment Loss?
A business investment loss is a loss that results from the actual or deemed disposition of specific capital properties. This results from disposing of capital assets to party that are at arm’s length from your entity (they are not related by family ties or by association).
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What assets can incur a business investment loss?
Capital properties that can incur a business investment loss can be anything from shares in a small business corporation to a debt that is owed to you by another small corporation. For example if the shares you own are for a company that has gone bankrupt then a deemed disposition of the asset will occur. Another example may be a debt that is owed to you by another small corporation, in which the debtor has defaulted, will also incur a business investment loss.
What happens when I have an ABIL?
When you incur an ABIL you may deduct it from your other sources of income. If the loss happens to be larger than your income sources then you may claim the remainder as a non-capital loss which can be carried back or forward!
Final Wrap-Up
Overall the ABIL is very important to consider when filing your tax return as this can be a very useful feature in saving you potentially thousands of dollars in taxes owing. The professional tax accountants and technician’s at Hamilton Accounting Solutions can help you identify if you have in fact incurred an ABIL and can help you use this feature to greatly reduce your taxes owing! See the CRAs website on what happens when you have an ABIL.
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