Net Operating Loss Account

The net operating loss account is an accumulation of your operating losses in years when your revenues from liquefaction activities are less than your expenses from liquefaction activities plus your investment allowance.

You use the balance in this account in calculating your net income.

The balance of your net operating loss account for a taxation year is:

  • The total net operating loss for the current and previous taxation years, less
  • The total of all amounts you deducted from your net operating loss account to calculate your net income in previous years

If you have a balance in your net operating loss account and your net operating income is greater than zero, you must deduct your net operating loss account balance when you calculate your net income. Your net income can’t be reduced to a negative amount.

When you calculate your net income, the balance in your net operating loss account must be deducted before any amount in your capital investment account can be deducted in calculating your net income.

There are also specific rules for calculating your net operating loss account balance in your first taxation year or when a corporation amalgamates.

Your First Taxation Year

You may be able to include qualifying expenditures you incurred before your first taxation year in your net operating loss account. Find out how you can elect to include these expenditures in your first taxation year.

Amalgamations

In certain circumstances, your net operating loss account may flow through to your amalgamated corporation. Find out if your amalgamated corporation qualifies.