Superficial Loss Rule Explained (With Examples)
The calendar version is the tax-loss harvesting calendar. The number you were trying to protect is the adjusted cost base. Both hang off how to invest in Canada. A loss only reduces capital gains, which is the capital gains guide. Moving the shares into a TFSA instead of selling them is the TFSA contribution guide.
- Two conditions, both required: an acquisition of the same or identical property by you or an affiliated person inside the 61-day window, and continued ownership, or a right to acquire, at the end of the 30 days after the sale.
- If you are the person who acquired the substituted property, CRA's capital-losses page says you can usually add the denied loss to the ACB of that property. The loss is postponed, not erased, when the bump has somewhere to land.
- A TFSA, RRSP, RRIF, FHSA, or RESP does not give you a personal capital gain to attach that bump to. A rebuy inside one of those accounts is the version that deletes the loss.
- CRA's capital-losses page lists situations that are not superficial losses, including a deemed sale on becoming or ceasing to be a resident, a change of use, and a sale because the owner died.
- A different ticker is not automatically a different property. CRA's identical-property test is whether each property in the group is the same as the others. There is no published safe list of ETF pairs.
When is a loss superficial?
CRA's Income Tax Audit Manual, chapter 29, describes a superficial loss when the same or an identical property, called a substituted property, is acquired in the period beginning 30 days before the disposition and ending 30 days after, by the taxpayer or an affiliated person, and at the end of that period the taxpayer or the affiliated person owns the substituted property or had a right to acquire it. Subparagraph 40(2)(g)(i) deems the capital loss to be nil. The manual's conditions table says the same thing in operational language: the acquisition has to fall inside that window, and the property still has to be owned at the end of the 30 days after the sale.
The consumer page on capital losses says that if you have a superficial loss you cannot deduct it in the year, and that if you are the person who acquires the substituted property you can usually add the denied loss to the adjusted cost base of that property. That addition decreases a later gain or increases a later loss. It is not a deduction today.
| Condition | What CRA's manual requires | A case that fails it |
|---|---|---|
| Acquisition inside the window | You or an affiliated person acquire the same or identical property in the 30 days before the sale or the 30 days after it. | Nobody affiliated buys it, in any account, in that window. A purchase 31 days after the sale is outside the window. Count calendar days, and confirm the trade date your broker will report. |
| Still held at the end | At the end of the 30 days after the disposition, you or the affiliated person still own it, or still have a right to acquire it. | The replacement is sold to a non-affiliated buyer before that thirtieth day, and nobody affiliated still holds an identical property. Partial shares and options can be a right to acquire. Read the contract. |
Table as of October 2026. Source: CRA Income Tax Audit Manual, chapter 29, and CRA's capital-losses page. Both conditions have to be met. A buy inside the window that is fully gone before day 30, with no affiliated person still holding the identical property, is not the fact pattern the manual describes. Do not build a trading strategy on that sentence. Settlement, DRIP, and a spouse's automatic contribution are how people meet the conditions by accident.
Who counts as affiliated?
The manual points at "affiliated person" in subsection 251.1(1). It does not, on the page reviewed, print a household list. CRA's capital-losses page says some examples of affiliated persons exist, and the text returned for this review did not include that list. This page will not invent the examples. Treat your own accounts, including TFSA, RRSP, RRIF, FHSA, and RESP, as your own acquisitions, because you are the taxpayer. Before you involve a spouse, a common-law partner, a corporation you control, or a partnership, read 251.1(1) or ask a tax preparer. The harvesting calendar's practical warning is the same: tell the other person which ticker is off limits until a date you both write down.
You sell a non-registered holding at a $4,000 loss and the same day you buy the same ETF in the same non-registered account. Both conditions can be met. The $4,000 is denied this year. If you are the person who acquired the substitute, CRA says you can usually add $4,000 to the ACB of those new units. Sell them later, outside a fresh window, and the higher ACB comes back as a smaller gain or a larger loss. Same sale, but the rebuy is inside your TFSA. The denied loss has nowhere useful to land, because the TFSA will not report a personal capital gain. The $4,000 is gone. The dollars are a teaching example, not a target and not a finding that your two funds are identical.
Which losses are not superficial?
CRA's page on non-superficial losses lists common situations where the loss is not a superficial loss. They include a deemed sale because you became or ceased to be a resident of Canada, a deemed sale because you changed the property's use, a disposition within 30 days of becoming or ceasing to be exempt from tax, a deemed sale because the owner died, the expiry of an option, and property appropriated by a shareholder on a winding-up. A corporation, partnership, or trust that disposes of non-depreciable capital property is in a different stop-loss rule. CRA says that loss is not added to the ACB in the same way, and it is not claimed immediately. Call the individual line, which the page prints as 1-800-959-8281, before you apply that paragraph to a holding company. The departure case is a residency problem, not a December trade.
You sold the ETF. The distribution two weeks later buys three more units in an account you forgot was enrolled. That buy is inside the window. Turn the DRIP off on the old ticker before you harvest, in every account that might receive it, including a spouse's account if that person is affiliated. A January TFSA contribution that rebuys the same ticker is the same condition.
What counts as identical property?
CRA's special-rules page says properties of a group are identical if each property in the group is the same as all the others. Shares of the same class, and units of the same mutual fund trust, are the examples it gives. An ETF is not given a special pass. Selling one Canadian equity ETF and buying another Canadian equity ETF can be a real substitute or it can be the same property. Index, share class, and currency hedging are facts. A new ticker is not a fact that ends the analysis. CRA has not published a safe pair list. The harvesting calendar says to treat "same index, different brand" as identical unless you have advice on that loss. This page agrees, and it will not clear a pair by name.
Frequently asked questions
Does the rule apply in a TFSA?
A loss inside a TFSA is not your capital loss. The rule matters when the sale was in a non-registered account and the rebuy, or the continued holding, is in the TFSA or another affiliated account. That is the fact pattern that denies the loss without giving you a usable ACB increase.
If I wait 31 days, is the loss allowed?
Only if nobody affiliated acquired the identical property in the 30 days before the sale either, and nobody still holds it at the end of the 30 days after. The window runs both directions. A buy the week before the sale counts. So does a buy on day 30 after. Day 31 is the first day outside, if you have counted the trade dates correctly.
Can I buy a similar fund the same day?
You can buy a fund that is not identical property. You do not have to sit in cash. You do have to be right about identical. Two funds that hold the same index are the dangerous pair. Two funds with a different country mix, or a different bond weight, are easier to distinguish. This page will not certify a ticker.
Does the denied loss disappear forever?
Not when you personally acquired the substitute in an account that still has an ACB. CRA says you can usually add the loss to that ACB. It disappears, in practical terms, when the substitute sits in a registered account that will never produce a personal capital gain, or when you cannot identify which property to add it to. Keep the worksheet. The ACB guide is the add.
What about a loss on my principal residence?
A principal residence is usually sheltered by the exemption on a gain, and a loss on a personal-use home is not a capital loss you harvest. Change of use, and a house that was partly a rental, are different files. The primary residence versus rental page is the fork. Do not run a stock rule on a house.
Are options and partial shares inside the window?
The manual includes a right to acquire the substituted property at the end of the period. An option that is still open can matter. A fractional-share DRIP can matter. If the dollar loss is large, have a person read the trades before you file. This page is the definition, not a sign-off on a basket of options.
Sources
- CRA Income Tax Audit Manual, chapter 29: superficial loss
- CRA: capital losses, superficial loss
- CRA: non-superficial losses
- CRA: identical properties
The loss is a date. The return is the claim.
A denied loss does not become a deduction because the software has a box. The 2026 tax guide is the filing side.
Get the 2026 Tax Guide — $49 CAD
