What Is ABIL?

by Craig Anthony

1 min read

An allowable business investment loss is a special type of capital loss that can be claimed against any type of income. In most cases, if you have a capital loss, you can only claim the loss against capital gains. With an ABIL, you can claim the loss against any income, including income from your job or your small business. Business investment losses refer to very specific types of losses. They occur when you dispose of small business corporation shares at a loss or when a small business corporation doesn’t repay a debt to you. In addition, if you own shares in a small business corporation that goes bankrupt, you also have a business investment loss. You can claim 50% of your business investment loss against income, and that amount is your ABIL. For example, if you have a $100,000 business investment, you are allowed to a $50,000 loss against your income. If your loss exceeds your income, you can roll it back three years or forward for 10 years. In the 11th year, the loss becomes a regular capital loss, and you can only claim it against capital gains. If you lose money on an investment in a small corporation, you can use an allowable business investment loss to offset your income and reduce your tax bill. This is just one of the ways you should be optimizing capital losses.

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