Superficial Loss Rule in Canada: How the 61-Day Test Works

Under CRA’s superficial loss rule, a capital loss is denied when you or an affiliated person — including your spouse, your TFSA or your RRSP — acquires the same or identical property in the 61 days from 30 days before to 30 days after the sale, and still owns it at the end of that period. In a taxable account the denied loss is usually added to the ACB of the replacement property; in a registered plan it is generally lost.

Last reviewed: August 29, 2026. This article was checked against current CRA guidance, the Income Tax Act and the technical sources listed below. The tests and calculations in this article can be used without the product.

Tax-loss harvesting is a legitimate tax-planning strategy. You sell an investment with an accrued loss, realize the capital loss, and use the loss against capital gains subject to the applicable tax rules.

Canada’s superficial loss rule can deny that loss when you or an affiliated person acquires the same or identical property around the time of the sale and still owns it at the end of the review period. The rule is easy to misapply because a purchase within 30 days is only one of two required conditions.

For context on how common capital losses and gains are among Canadian investors, see our Canadian capital gains statistics .

The two conditions that must both be met

The CRA’s capital-loss guidance and the definition in section 54 of the Income Tax Act use a two-part test. A capital loss is superficial when:

1. During the period beginning 30 calendar days before the disposition and ending 30 calendar days after it, you or a person affiliated with you acquires, or has a right to acquire, the same or identical property. The acquired property is called the substituted property.
2. At the end of that period, you or a person affiliated with you still owns, or has a right to acquire, the substituted property.

This second condition matters. Simply owning the same security in a TFSA before the 61-day period does not trigger the rule. If a DRIP or another acquisition occurs in that TFSA during the period and substituted property is still held at the end, both conditions may be met.

The 61-day period and settlement dates

The review period contains 61 calendar days: 30 days before the disposition, the disposition date, and 30 days after it.

For exchange-traded securities, review the transaction by settlement date, not merely by the date the order was entered. The CRA’s T5008 guide describes the settlement date as the date on which a securities transaction is completed.

If a sale settles on November 15, the period runs from October 16 through December 15, inclusive. A replacement purchase that settles on December 16 or later is outside the period. Review the settlement date of the replacement purchase as well as the sale.

Acquisitions before the sale count too. A purchase made two weeks before you decided to sell can satisfy the first condition if substituted property is still owned at the end of the period.

What counts as identical property

The Canadian rule uses the terms same property and identical property, not the US expression “substantially identical.”

The CRA’s archived bulletin on the meaning of identical properties describes them as properties that are the same in all material respects, so a prospective buyer would not prefer one over another. The result depends on the inherent qualities and rights of the investments and is a question of fact.

Selling and buying the same class of shares of the same issuer is the straightforward case. Fund substitutions require more care:

• A different ticker or fund provider does not, by itself, establish that two funds are not identical.
• The underlying index, legal structure, investment mandate, investor rights, currency-hedging policy and other material features may matter.
• In a published technical interpretation, the CRA said that same-index mutual funds from different financial institutions would generally be identical, subject to the facts. It also said that funds tracking materially different indices would generally not be identical.

If the purpose of a temporary replacement is to preserve market exposure, choose an investment with a materially different index or mandate and document the differences. A tax adviser should review a proposed substitution when the distinction is uncertain.

Affiliated persons and accounts

The acquisition does not have to occur in the account where the loss arose. The CRA lists affiliated-person examples that include spouses or common-law partners and corporations controlled by the taxpayer or the taxpayer’s spouse or common-law partner. Registered-plan trusts can also fall within the affiliated-person rules.

For a typical individual investor, review these locations:

The statutory rules also cover certain partnerships and trusts. Complex ownership structures should be reviewed with a qualified tax adviser.

Where the denied loss goes

The result depends on who acquired the substituted property and where it is held.

The ACB addition is provided by paragraph 53(1)(f) of the Income Tax Act . The CRA summarizes the usual result as adding the superficial loss to the ACB of the substituted property.

Full reacquisition example

You buy 100 shares for $50 each, so the total ACB is $5,000. You later sell all 100 shares for $3,800, with no selling costs in this simplified example. The loss before applying the superficial loss rule is $1,200.

Twelve days later, you buy 100 shares for $40 each in a taxable account and continue to own them at the end of the 61-day period. Both conditions are met, and the full $1,200 loss is superficial.

The $1,200 is not claimed as a current capital loss. The higher ACB affects the gain or loss when the substituted shares are later disposed of.

The registered-plan trap

Suppose you sell shares at a loss in a taxable account, buy the same or identical property in your TFSA during the 61-day period, and the TFSA still owns the substituted property at the end. The taxable loss can be denied, but there is no useful personal ACB inside the TFSA to preserve it. The tax benefit of the loss is generally gone.

Do not confuse that sequence with an in-kind contribution of a loss property from a taxable account directly to your own registered plan. Subparagraph 40(2)(g)(iv) of the Income Tax Act separately denies losses on certain direct dispositions to registered-plan trusts. The direct-transfer rule can apply without relying on the ordinary two-condition superficial-loss test.

Before a tax-loss sale, check for scheduled purchases in every relevant registered plan. A pre-existing registered-plan holding alone is not enough, but a DRIP, automatic contribution or manual purchase during the period can satisfy the acquisition condition.

How to calculate a partial superficial loss

The loss is not automatically denied on every unit sold when fewer units are acquired or held at the end of the period. The commonly used formula, consistent with the CRA’s archived administrative example, is:

Superficial loss = [(least of S, P or B) ÷ S] × L

Where:

• S is the number of units disposed of at that time.
• P is the number of units acquired during the 61-day period.
• B is the number of units owned at the end of the period.
• L is the loss on the disposition before applying the superficial loss rule.

Partial reacquisition example

Use the same sale as above: 100 shares sold and a $1,200 loss before applying the rule. Assume you buy 40 shares during the period, own 40 shares at the end, and neither you nor an affiliated person has any other acquisition or holding that changes the calculation.

Superficial loss = [(least of 100, 40 or 40) ÷ 100] × $1,200 = $480

The value of B is essential. A calculation based only on the number reacquired can be wrong if units are sold again before the end of the period or if other identical units remain on hand.

Common situations to review

Automatic DRIPs and systematic purchases

A DRIP, pre-authorized contribution or employee share purchase can be an acquisition even when you did not choose the date manually. It causes a superficial loss only when the two-condition test is completed, including ownership of substituted property at the end of the period.

If you intend to realize the full loss, review or pause automatic acquisitions early enough to cover the 30 days before and after the disposition.

Spousal portfolio overlap

You sell an ETF at a loss in a taxable account. Your spouse buys the same ETF in an RRSP during the period and the RRSP still owns it at the end. The acquisition can make your loss superficial, and the registered-plan holding generally prevents a useful taxable ACB adjustment.

Purchases at another brokerage

You sell shares at one brokerage and buy the same shares at another. The tax test applies across the relevant ownership, not separately to each brokerage account. This is one reason broker book value can differ from tax ACB .

Tax-loss harvesting approaches that respect the rule

Wait until the period has ended. For exchange-traded securities, arrange for the replacement acquisition to settle after the 30-day post-disposition period. Remember that acquisitions in the 30 days before the sale are also part of the test.

Use a materially different temporary holding. A different provider or ticker is not enough by itself. Compare the index, mandate, structure and investor rights, then retain the fund documents that support the distinction.

Coordinate affiliated accounts before selling. Check taxable and registered accounts for you and your spouse or common-law partner, controlled corporations where relevant, DRIPs, standing orders and pending trades.

Before relying on a loss, test the dates, acquisitions and ending ownership with the superficial loss calculator . If the loss remains available, the tax-loss harvesting and carryback calculator can model its use against current and prior-year capital gains.

A 61-day review worksheet

For each loss disposition, record the inputs separately from the conclusion. The following structure gives an accountant or reviewer enough information to reproduce the test.

Use a separate acquisition table when several accounts are involved:

Keep the records that establish the original ACB for as long as they remain relevant to a later disposition. The CRA’s capital gains guide says supporting documents are needed to calculate and support capital gains or losses, and its personal record-retention guidance sets a general minimum of six years. The Canadian ACB checklist separates source documents from calculations, and the adjusted cost base spreadsheet template provides a simple ledger structure.

If you already claimed a superficial loss

1. Reconstruct all acquisitions and end-of-period holdings for you and affiliated persons.
2. Apply the S/P/B/L formula if only part of the loss is denied.
3. Record any permitted ACB addition against the correct owner and substituted property.
4. Correct the claimed loss. The CRA provides Change my return, ReFILE and mail options . The appropriate route depends on the return and who filed it.
5. Keep the calculation and supporting statements with the records for that disposition.

Do not assume a broker’s tax reporting has resolved the issue. A broker may make an adjustment based on activity visible to it, but it cannot validate purchases in another institution, a spouse’s account or every affiliated entity. Maintain an independent record and reconcile it with brokerage information.

Superficial-loss adjustments belong in the same pooled history used for adjusted cost base calculations and DRIP transactions .

Frequently asked questions: Superficial loss rule in Canada

What is the superficial loss rule in Canada?

A capital loss can be superficial when two conditions are met: you or an affiliated person acquires the same or identical property during the 61-day period that starts 30 calendar days before the disposition and ends 30 calendar days after it, and you or an affiliated person still owns or has a right to acquire the substituted property at the end of that period. A purchase within the window does not, by itself, complete the test.

How long do I need to wait before repurchasing after a tax-loss sale?

For exchange-traded securities, use settlement dates when reviewing the window. If the sale settles on November 15, the 61-day period runs from October 16 through December 15, inclusive. A replacement acquisition that settles on December 16 or later is outside that window. You must also review acquisitions during the 30 days before the disposition and activity by affiliated persons and registered plans.

Does the superficial loss rule apply to RRSP and TFSA accounts?

It can. If you sell a security at a loss in a taxable account, the same or identical property is acquired in your or an affiliated person’s RRSP, TFSA, RRIF or FHSA during the 61-day period, and the substituted property is still owned at the end of the period, the loss can be denied. A holding that was already in a registered plan before the window does not trigger the rule by itself; there must also be an acquisition during the window. A registered-plan acquisition generally leaves no useful taxable ACB adjustment to preserve the denied loss.

Can I claim a capital loss inside a TFSA?

No. CRA’s TFSA guide says losses incurred within a TFSA cannot be claimed as a capital loss on your income tax and benefit return, just as gains inside a TFSA are generally not taxable. The superficial loss rule matters for TFSAs in a different way: buying the same or identical property in your TFSA within the 61-day period can deny a loss you realized in a taxable account.

What are the rules for using a capital loss in Canada?

An allowable capital loss generally has to be applied against taxable capital gains for the same year; it cannot be deducted from other income such as employment income. A net capital loss can be carried back three years using Form T1A, Request for Loss Carryback, or carried forward indefinitely. A denied superficial loss cannot be used this way; when it is added to the ACB of the substituted property, it affects the gain or loss when that property is later disposed of.

What happens to the denied loss under the superficial loss rule?

When the substituted property is held in a taxable account, the denied loss can usually be added to the adjusted cost base of that property. This defers recognition until a later disposition. If the substituted property is acquired in a registered plan, the ACB addition generally provides no tax benefit, so the denied loss is effectively permanent. Partial reacquisitions require a proportional calculation based on units sold, units acquired and units owned at the end of the 61-day period.

Calculation and review notes

myCostBase can record superficial-loss ACB adjustments alongside purchases, sales, DRIPs and other ACB events.

For a direct contribution rather than a sale and repurchase, see the TFSA and RRSP in-kind contribution examples . The direct-transfer loss rule needs a separate review.