As explained at ¶263-530ff., rules were introduced in 2008 to restrict the amount of losses that individuals may offset against other income or gains in certain circumstances. In some cases, relief is denied altogether.

A key issue in determining whether or not the restrictions apply is the concept of whether the individual is trading in a ‘non-active capacity.’ An individual is said to be trading in that capacity if he or she:

carries on the trade at any time during the year, but

does not devote ‘a significant amount of time’ to the trade in the ‘relevant period for the tax year’ (ITA 2007, s. 74C(1)).

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