The superficial loss rule: tax-loss selling without losing the loss

The two tests

A loss on a sale is superficial only when both of these are true:

1. A buy inside the window. You, or a person affiliated with you, bought the same or an identical investment during the period that starts 30 calendar days before the sale and ends 30 calendar days after it. That's 61 days with the sale in the middle.
2. Still owned at the end. On day 30 after the sale, you or the affiliated person still own it.

The first test catches buys before the sale too. If you bought more units in November to average down, then sell your original units at a loss in December, the November units are inside the window. If you still hold them on day 30, the loss is superficial.

The second test is what makes an ordinary round trip safe. If you buy a stock and sell all of it at a loss two weeks later, the purchase sits inside the window, but you own none of it on day 30, so the loss stands.

"Affiliated" includes your spouse or common-law partner, a corporation either of you controls, and a trust you're the majority beneficiary of. Your own TFSA, RRSP, RRIF and FHSA are trusts of that kind, which is why a buy in them counts.

What each kind of buy-back costs: a worked example

You bought 100 units for $50 each in a non-registered account and sell them all for $30 on December 30, 2026. That's a $2,000 capital loss. Then the price recovers a little and you buy at $31:

In the same-account and spouse rows, the denied loss isn't gone. It's added to the cost base of the units bought back, so it comes back as a smaller gain or a bigger loss when those units are sold. You lose the timing: the deduction moves from 2026 to whenever that later sale happens.

A partial buy-back denies only part of the loss. The denied share is the smallest of the units sold, the units bought in the window and the units still held at the end, divided by the units sold. 40 of 100 units denies $800 of the $2,000.

Buying it back in your TFSA or RRSP

This is the expensive mistake. Selling in a non-registered account and buying the same thing in your TFSA, RRSP or FHSA within 30 days is still a superficial loss, because those accounts are affiliated with you. The denied loss would be added to the cost base of the units inside the plan, but nothing inside a registered plan is taxed as a capital gain, so that higher cost base is worth nothing. The $2,000 in the example is simply lost.

A related rule catches the shortcut of moving a losing investment straight into a TFSA or RRSP as an in-kind contribution. That counts as a sale at market value, and a loss on it is denied outright, under a separate rule that doesn't care about 30 days. If you want the loss and the investment in the registered account, sell it in the non-registered account, contribute the cash, and wait until day 31 before buying it inside the plan.

Dividend reinvestment counts as buying

A DRIP buys new units every time a dividend is paid. If one lands inside the window, it's an acquisition like any other, and if you still hold those units on day 30, it denies part of the loss in proportion to the units it bought. Turn the DRIP off on the holding you plan to sell, in every account that holds it, before the window opens.

What counts as the same investment

• Shares of the same class of the same company are identical, whichever exchange or currency you buy them in.
• Index funds and ETFs are the grey area. CRA has said that index funds tracking the same index are generally identical even when different companies run them. Two funds that follow different indexes are generally not. CRA treats it as a question of fact, so the cautious switch is to a fund with a different index.
• A different company in the same industry is not identical. Selling one bank and buying another keeps you invested in the sector while the window runs.

The 2026 tax-loss selling deadline

For listed shares, CRA treats the sale as happening on the settlement date, not the day you place the trade. Canadian and US stocks and ETFs now settle one business day after the trade (T+1), so the last trade that settles in 2026 is on December 30, 2026.

A sale that settles on December 31, 2026 has a window running from December 1, 2026 to January 30, 2027. Buying back on Monday, February 1, 2027 or later is outside it on either reading of the date. Mutual funds and some foreign listings settle on different schedules, so check your broker's own year-end cutoff for anything that isn't a listed stock or ETF.

What an allowed loss is worth

Losses count at the same 50% inclusion rate as gains, so the $2,000 in the example offsets $1,000 of taxable capital gains. It first reduces gains in the same year. Whatever is left becomes a net capital loss that you can carry back to any of the three previous years (with form T1A) or forward indefinitely, but only against capital gains, not against salary or other income.

Check before you sell, not in April

The rule looks across every account you and your spouse hold, so the buy that sinks a loss is often in an account you weren't thinking about: a TFSA at another institution, a DRIP, a spouse's RRSP. Looniee Plus has a tax toolkit that pools your adjusted cost base across your non-registered accounts and flags each superficial loss, saying whether the denied amount moves to the new units or is lost in a registered account. Its figures are estimates to check against your slips, not tax advice.

For the ACB side, see the best capital gains trackers for Canadians. For the account side, the TFSA contribution room calculator shows how much cash you can move into a TFSA after selling.