As indicated in note 3 of Form T691, an individual whose interest in the partnership is in a tax shelter that the partnership holds must include on line 8 of this form, for each type of loss (allowable capital losses, business losses and property losses), the amount of his or her share of the net loss of the partnership that is more than the amount allowed under paragraph 127.52(1)c.1) of the Income Tax Act (ITA). These losses are generally reported on line 12200 of the return, except rental (line 12600) and farming losses (line 14100).
Normally, the amount allowed under paragraph 127.52(1)c.1) of the ITA corresponds to the net taxable capital gains that the partnership allocated to the partner or that the partner realized on the disposition of his or her interest in the partnership.
This form is used to calculate the amount to enter on line 8, Losses from partnerships that are tax shelters of Form T691.
This form is made up of two parts:
- Part A, “Non-deductible capital loss for alternative minimum tax purposes,” and
- Part B, “Non-deductible business and property losses for alternative minimum tax purposes.”
Both parts must be completed for each partnership in which the partner’s interest is in a tax shelter held by the partnership. The total of the losses computed in each of these parts is carried over to line 8 of Form T691.
Part A, “Non-deductible capital loss for alternative minimum tax purposes”
Lines 1 to 5 must be completed for each partnership that allocated capital losses to the partner.
Line 1 can be completed manually in the case where no T5013 slip has been issued to the partner. Otherwise, the amount on line 1 is calculated automatically and corresponds to the total of the amounts entered in boxes 151, Capital gains (losses), 153, Gains (losses) on qualified small business shares (QSBCS), 154, Gains (losses) on qualified farm or fishing property, and 155, Gains (losses) on mortgage foreclosures – qualified farm or fishing property, of a T5013 slip for which a tax shelter number is entered.
Enter, on line 2, the amount of capital gain on the disposition of the partner’s interest in the partnership.
An adjustment is made on lines 6 to 12 in order not to take into account the capital losses that were not actually deducted in the tax return.
For example, if the capital loss calculated in Schedule 3 only arises from the capital loss entered in box 151 of the T5013 slip, no amount is carried over to line 8 of Form T691, because this capital loss is not deducted in the tax return. However, if capital gains from other sources are also entered in Schedule 3, the amount that is carried over to line 8 is limited to the capital gains amount entered in Schedule 3.
Part B, “Non-deductible business and property losses for alternative minimum tax purposes”
Business loss
Lines 13 to 19 must be completed for each partnership that allocated business losses to the partner.
Line 13 can be completed manually. It is however calculated automatically when a business loss amount is entered in:
- the T5013 slip, when a tax shelter number is entered on the slip, or
- the workchart on line 12200.
Business loss amount entered in the T5013 slip
The amount on line 13 corresponds to the loss amount entered in either one of the following boxes of the T5013 slip:
- box 101, Limited partner's farming income (loss),
- box 1021, Agricultural income stabilization (AgriStability and AgriInvest programs),
- box 1022, Agricultural income stabilization (Harmonized AgriStability and AgriInvest programs)
- box 103, Limited partner's fishing income (loss),
- box 104, Limited partner's business income (loss),
- box 116, Net business income (loss),
- box 120, Net professional income (loss),
- box 122, Net commission income (loss),
- box 1241, Net farming income (loss),
- box 1242, Net farming income (loss) (AgriStability and AgriInvest programs),
- box 1243, Net farming income (loss) (Harmonized AgriStability and AgriInvest programs),
- box 126, Net fishing income (loss).
The carrying charges entered in box 2161, Carrying charges and interest expenses incurred to earn business income , is added to the loss amount indicated in either one of the boxes mentioned above. The total of these two amounts is carried over to line 13.
You must manually complete the line relating to the gain resulting from the disposition of the interest in the partnership (line 15), as well as the line relating to the gain resulting from the disposition of property used in the business (line 14). The amount on line 17 corresponds to the total of the amounts entered in boxes 151, Capital gains (losses), 153, Gains (losses) on qualified small business shares (QSBCS), 154, Gains (losses) on qualified farm or fishing property, and box 155, Gains (losses) on mortgage foreclosures – qualified farm or fishing property, of the T5013 slip.
Property loss
Lines 20 to 29 must be completed for each partnership that allocated property losses to the partner.
Line 20 can be completed manually. It is however calculated automatically when a property loss is determined using:
- the T5013 slip, when a tax shelter number is entered on the slip, or
- Form T776, when the check box Indicate if your interest in the partnership constitutes an interest in a tax shelter (section 237.1) is selected.
Property loss amount determined using the T5013 slip
The amount on line 20 corresponds to the negative amount resulting from the following calculation:
The total of the amounts entered in the following boxes:
- box 107, Limited partner's rental income (loss),
- box 110, Canadian and foreign net rental income (loss),
- box 128, Interest from Canadian sources,
- box 129, Actual amount of dividends other than eligible,
- box 1321, Actual amount of eligible dividends,
- box 135, Foreign dividend and interest income,
- box 146, Other investment income.
Less the total of the amounts entered in the following memo boxes (under box 59):
- box 212, Carrying charges on rental income,
- box 2162, Carrying charges - other.
You must manually complete the line relating to the gain resulting from the disposition of the interest in the partnership (line 23), as well as the line relating to the gain resulting from the disposition of property held to earn property income (line 22). The amount on line 25 corresponds to the total of the amounts entered in boxes 151, Capital gains (losses), 153, Gains (losses) on qualified small business shares (QSBCS), 154, Gains (losses) on qualified farm or fishing property, and 155, Gains (losses) on mortgage foreclosures – qualified farm or fishing property, of the T5013 slip.