Carry Forward
Certain tax amounts can be "carried forward" to future tax years if they aren't fully used in the current year. This prevents you from losing the benefit of unused room, losses, or credits simply because you couldn't use them in one particular year.
Common carry-forward items include: RRSP contribution room (carries forward indefinitely), net capital losses (carry back 3 years or forward indefinitely), non-capital losses from business (carry back 3 years, forward 20 years), unused tuition credits (carry forward indefinitely), charitable donations (carry forward 5 years), and TFSA contribution room (accumulates indefinitely).
Strategic use of carry-forwards is a key tax planning tool. For example, if you expect to be in a higher tax bracket next year, you might carry forward RRSP contributions to claim the deduction when it's worth more. Similarly, carrying forward capital losses to offset a large gain in a future year can save significant tax.
Related Terms
RRSP (Registered Retirement Savings Plan)
An RRSP is a government-registered account where contributions are tax-deductible and investments grow tax-free until withdrawal.
Capital Gains
A capital gain arises when you sell a capital property — such as stocks, mutual funds, ETFs, real estate (other than your principal residence), or cryptocurrency — for more than its adjusted cost base (ACB).
TFSA (Tax-Free Savings Account)
A TFSA allows Canadian residents aged 18 and older to invest money and withdraw it at any time without paying tax on the growth.
Tax Deduction
A tax deduction reduces your taxable income before tax is calculated, effectively saving you money at your marginal tax rate.