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stux cumulative net investment losses could cause tax troubles f cte while millions of canadians are bugging their financial advisors about how to crystal lize up to 100000 in tax free capital gains before the exemp tion disappears many will be bitterly disappointed they will be hit with cnil or cumulative net investment loss es that have been growing since 1987 back then ottawa introduced a rule that effectively says any investment expenses we claim as deductions against income earned through non investment sources must be deducted from our capital gains before we can use the 100000 tax free capi tal gains deduction cnil may not be a big prob lem in the future when capital gains are taxable anyway but right now when we want to squeeze the last dollar out of this deduction we can indeed feel the pain in the simplest of terms if you borrowed 100000 to buy an investment one year ago and claimed 10000 interest expense as a tax deduction against your salary you must earn 10000 in taxable capital gains or other investment income before you can claim any tax free capital gains the sad part is that canadi ans who voluntarily claim capi tal gains this last time without considering cnil may trigger a big tax problem rather than cre ating tax free gains they may have been better off hanging onto the cottage property or other investments for years or decades and paying the tax in the future so what type of investment expenses must be included in your calculations the obvious one is all your investment car rying charges and interest interest expenses incurred when you borrow to operate a business are not included though in fact it was often advisable to borrow for business purposes while paying cash for investments however many canadians borrowed to buy investments that produced little or no yield it looked good at the time in that the tax deductions wiped out tax on other forms of income while giving them the ability to own large investments that might have paid off in the future losses incurred when you were involved in the rental or leasing of real estate and 50 per cent of resource flow through deductions and losses incurred when investing in lim ited partnership type invest ments are others that must be included however there are types of income that will reduce your cnil account for example if you earn dividends or interest income it will reduce your cnil even though they dont come from the same investments that produced the losses in the first place while investing in limited partnerships often creates a cnil problem income earned by owning lps as they are called will reduce your cnil balance the same can happen when you invest in flow through shares you are allowed to claim flow through deductions however if the investment pays off you can earn substantial profits they should be added to your cnil account to reduce its balance if you own rental real estate your money brian costello that produces positive cash flow those amounts should also be added to your cnil balance many investors have already triggered some capital gains in the past dont forget that the non eligible portion of those cap ital gains can also be used to reduce your account if you are considering using the capital gains deduction there are a few things you might want to do to eliminate your cnil account in advance some investors buy high yield ing shares or mutual funds just before they do x dividend you are now guaranteed the divi dend usually the share prices are knocked down the next day as they no longer include the dividend the dividend will count towards your cnil account and you can sell the shares at a loss that loss will also allow you to sell other investments at a capital gain one will wipe out the other if you own a small business corporation you may want to pay yourself dividends rather than salary the dividends wil be useful in reducingyour cnil account but they may reduce the amount of money you can contribute to your rrsp or your canada pension plan benefits for this year it doesnt take three wise men to know how smart it is to shop here if its new and exciting its at winners savings of 2060 on brand name and designer fashions for the entire family with new shipments arriving daily discover for yourself why price and selection are our winning combination 25000 square feet of the latest brand name designer fashions gifts dresses outerwear career dressing casual wear plus sizes lingerie hosiery handbags accessories mens traditional contemporary wear infants toddlers girls boys wear gifts and more liberal refund policy convenient layaway plan save 2060 on brand name fashions for the entire family everyday hwy7 mccowan rd sw corner phone 9054151441 fwinners everybody loves a winner open monday to friday 930900 saturday 930600 sunday 1100500 plus 17 other metro locations i