T936 – Cumulative Net Investment Losses

The calculation of CNIL updates the Cumulative Gains Limit in part 2 of the Calculation of Capital Gains Deduction (T657). Since CNIL is a cumulative account, you must enter the total investment expenses and the total investment income at the end of the previous year if the amounts are not updated during the roll forward process. However, you should confirm the calculation of CNIL by comparing it with the Notice of Assessment sent by Canada Revenue Agency for the previous year.

The CNIL calculation is updated for interest expenses and carrying charges, 50% of resource expenses, limited and non-active partnership income/losses, net rental income/losses, dividend income, interest and other investment income and 50% of the recovery of exploration and development expenses. Also updated are the foreign non-business tax deductions (ss. 20(11)/(12)), amounts withdrawn from AgriInvest Fund 2 (line 13000), other property expenses entered on line 23200 as well as property income included on line 13000.

Annuity payments taxable under paragraph 56(1)(d) included in the Other Pension and Superannuity Summary (line 11500) and/or the Other Income Summary (line 13000) must be entered in Part 2 of this form. This amount should exclude the capital repayment portion deductible under paragraph 60(a).

Capital gains which are not eligible for the capital gains deduction must be included in cumulative investment income. Likewise, any net capital loss of other years which is included in cumulative investment expenses should be reduced by the non-eligible capital gains.

Prior to March 1992, only reserves on property disposed of before 1985 were not eligible for the capital gains deduction. To the extent that pre-1985 reserves were included in income between 1988 and 1991, CNIL carried forward from 1991 should be retroactively adjusted. Chart 1 of Form T657 identifies pre-1985 reserves included in income between 1988 and 1991.