The calculation of the maximum amount of the loss incurred in a particular year which may be applied in the current year is illustrated by the following steps:
Step 1: Determine the portion of the non-capital loss of the particular year resulting from the grossed-up OCCA deduction or other incentives listed in paragraph 27.
Note Where the corporation has taxable income before the OCCA deduction in the particular year, use the non-capital loss amount, not the OCCA deduction.
Step 2: Where all or part of the loss determined in Step 1 was applied in another year and the applied loss was restricted by subsection 35(2), Step 2 must be performed; otherwise, proceed to Step 3.
Determine the portion of the grossed-up non-capital loss in Step 1 which was carried over and applied to other years and adjust the loss to the "grossed-up" amount of the loss year:
Amount of loss: deducted in each year loss applied × (Ontario allocation factor in the year loss was applied / Ontario allocation factor in the loss year)
Step 3: Calculate the portion of the grossed-up non-capital loss in Step 1 which is available for deduction in the current year:
Amount in Step 1 minus amount in Step 2.
Step 4: Calculate the maximum non-capital loss carryover available for deduction in the current year which relates to OCCA and the other Ontario incentives listed in paragraph 27:
Amount in Step 3 × (Ontario allocation factor in the loss year / Ontario allocation factor in the current year)
Step 5: Determine the portion, if any, of the unused non-capital loss from the particular year not related to the grossed-up Ontario incentives.
Step 6: Compute the maximum portion of non-capital loss that may be applied in the current year:
Add the amounts in Steps 4 and 5.