Weekly Tax Tip - Consider selling investments with accrued losses before the end of the year

December 2017

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If you’ve realized capital gains in the year, consider selling assets with an accrued loss to offset the gains. You may also want to realize the loss if you’ve had capital gains in the last three years that weren’t offset by your capital gains exemption. In order for a disposition of marketable securities in an open market to be included in your 2017 tax year, you’ll have to sell them on or before the stock exchanges’ last trading day for settlement in 2017. Note that the settlement date for most Canadian and U.S. stock exchanges has generally been shortened from three business days after the trade date to two business days after the trade date. Generally, for Canadian and U.S. exchanges, December 27 will be the last trading date if you want to have the transaction settled in 2017.

Note that rules (known as the stop-loss rules) apply to deny losses on certain dispositions of property, such as:

  • Where you transfer an asset to your spouse or a corporation controlled by you and/or your spouse; or
  • Where you sell an asset on the open market, and you, your spouse or a corporation controlled by you or your spouse reacquires it within 30 days of its disposition.

Note that these stop-loss rules will also apply where you sell or contribute an asset to your or your spouse’s RRSP or TFSA at a loss or where you sell an asset at a loss and that asset is repurchased in an RRSP or TFSA belonging to you or your spouse within 30 days.

These rules are complex and can apply in situations not discussed here, so consult with a trusted BDO tax advisor. As well, read our article “Tax Rules to Remember When Triggering Capital Losses”.

This tax tip is a publication of BDO Canada LLP on developments in the area of taxation. This material is general in nature and should not be relied upon to replace the requirement for specific professional advice. The information in this tax tip is current as of December 4, 2017.