THE SHORT · TAX · Canada
The 30-day rule that cancels your tax loss
Selling at a loss to cut your tax works — unless you buy the same security back inside a 61-day window, including in your spouse’s account.
By the Yoseri News desk · · 2 min read
This article describes the rules of Canada. Income tax, pension plans and tax-sheltered accounts do not transpose from one place to another.
These are not the rules of the region you picked (): this article describes those of Canada. The reasoning holds everywhere; the account names, the caps and the ages do not.
Selling an investment at a loss lets you reduce the taxable gains of the year, of the three previous years, or of every future year. It is a legitimate, well-known mechanism.
Far less well known: the superficial loss rule. If you buy the same security back — or an identical one — within 30 days before or after the sale, the loss is denied. It does not disappear: it is added to the cost base, which pushes it into an uncertain future.
The window is therefore 61 days in total, and it covers every account: yours, your TFSA, your RRSP, and your spouse’s.
A worked case: $726.40 of realised gains, $410 of realised losses, a net gain of $316.40, half of which is taxable. Two positions held outside a shelter still show usable unrealised losses of $82.40 and $17.00. A third, down 4.2%, sits in a TFSA: unusable.
One last point, and it counts: selling at a loss purely for tax is still an investment decision. You are leaving a position you held for a reason. The tax saving is certain; what the security does next is not.
Yoseri does not watch that thirty-day window for you: it shows your positions and your transactions on the Investments page, and leaves the rule to be applied on your side.
Yoseri News is an educational publication. Nothing in this article is investment advice, a recommendation to buy or sell, or tax advice. Yoseri is registered as neither an adviser nor a dealer with any market authority. The tax rules described here are those of Canada, and the limits change: check your own entitlements before acting.