Schedule 4 (corporation loss continuity and application)

A buyer or seller meets Schedule 4 when asking which tax losses a corporation has and how much has been used. The CRA’s T2 guide says the application and continuity of those four losses are calculated on it, while capital losses are determined on Schedule 6, and that Part 2 of Schedule 4 establishes the continuity and application of capital losses. See whether you keep loss carryforwards if you buy shares.

What the guide says

A corporation can apply unused losses against income it earned in the current year or in previous years. It can choose whether to deduct an available loss, and for each type of loss it should deduct the oldest first. The guide says to use Schedule 4 to request a carryback, and that special rules apply to losses after an acquisition of control, a loss restriction event.

What to ask

• Schedule 4 from each recent return, to see the loss balances the corporation reports
• Whether the losses are non-capital, farm or capital, since the current-year capital loss is calculated on Schedule 6 before its continuity is tracked on Schedule 4
• Whether the owner can show the non-capital loss balance through the CRA’s View return balances service