See how much you save by crystallizing unrealized losses, which substitute ETFs to buy, the 30-day superficial loss window, and the year-end settlement deadline.
When you sell a security for less than you paid, you realize a capital loss. This loss offsets capital gains on your return — reducing the taxable portion at 50% inclusion. If you have no gains this year, the loss carries forward indefinitely or can be applied back 3 years.
The key constraint is the superficial loss rule: if you repurchase the same security within 30 days (before or after the sale), the loss is denied. The workaround is buying a substitute ETF that tracks a similar index from a different fund provider — maintaining your market exposure while crystallizing the loss.
The "net benefit" calculation accounts for the fact that your substitute ETF will have a lower ACB than your original position, meaning you'll eventually pay more capital gains tax when you sell it. The harvest is still profitable because you get the tax savings now and defer the cost to the future (time value of money).
Tax-loss harvesting is the strategy of selling investments at a loss to crystalize a capital loss, which offsets capital gains and reduces your tax bill. The loss is "real" — it reduces your taxable capital gains dollar for dollar at the 50% inclusion rate. You can carry unused losses forward indefinitely or back 3 years.
If you sell a security at a loss and buy the same (or identical) property within 30 calendar days before or after the sale, and still hold it at the end of that period, the CRA denies the loss. The denied loss gets added to the ACB of the repurchased shares. To avoid this, either wait 31 days to rebuy or buy a substitute ETF from a different fund manager.
A substitute ETF tracks a similar (but not identical) index from a different fund provider. For example, selling XIC (iShares S&P/TSX) and buying VCN (Vanguard FTSE Canada) maintains your Canadian equity exposure without triggering the superficial loss rule. The CRA has not published a definitive list of what counts as "identical," but different indices from different providers are generally accepted.
Canadian equities settle T+1 (one business day after trade). To settle in 2026, you must sell by the second-to-last business day of December. In most years this is around December 29-30. Check the TSX holiday calendar for the exact date.
No. Losses realized inside a TFSA or RRSP cannot be claimed on your tax return — they vanish permanently. Tax-loss harvesting only works in a non-registered (taxable) account. This is one reason why holding volatile or speculative investments in taxable accounts has a silver lining: at least the losses are deductible.