It is important to keep proper records to verify your claim. You should keep records of purchases and sales of your shares.
If you have a capital loss but no capital gain in the current year, you must carry this loss forward until you have a capital gain to offset it against.
If we audit you and we find that you have incorrectly claimed losses, penalties may apply.
Example
Peter is an administrative officer. In 2008, he reported a loss from futures trading of $68,000 at Net income or loss from business, question 15. His return was selected for review and he was asked to provide documentary evidence relating to his investment activities.
Peter provided a summary of monthly gains and losses for the current and prior income years as well as activity statements from his investment broker. He provided no other information. His prior year returns showed capital gains using the other method, as all trades occurred within 12 months. Capital losses had been claimed against the gains.
As Peter was unable to satisfactorily demonstrate that he was carrying on an investment business, his deduction was disallowed. His losses were considered to be capital losses which must be carried forward and offset against future capital gains.
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