Investment losses - make
use of them.
Income Tax Act s. 3, 40(2)(g)(iv), 111(1)(b)
If you have a capital loss on an investment
outside of an RRSP, RRIF, TFSA or other registered account, you can sell the investment and utilize the capital loss
to offset it against capital gains. You can offset the capital losses
against current year capital gains (not against other types of income), or
you can carry back the losses to offset them against capital gains in any of
the previous three years. You can also carry the capital losses
forward indefinitely, to be offset against future capital gains.
If you are selling the "loss" shares near the end of the year,
make sure the
settlement date (normally 3 business days after the
trade date) will be on or before the last business day
in December, to be included as a sale in the current
year.
If desired, after you sell shares to utilize
the loss, you can then repurchase them, but wait at least 30 days in order
to avoid
having your loss disallowed as a superficial loss.
The loss will also be a superficial loss if the shares are repurchased by a
person affiliated with you, such as your spouse or common-law partner.
Do
not transfer the shares to your RRSP or TFSA at a loss, because the losses
will not be deductible at any time.
Tax
tip: If you have capital gains in the current year or any of the previous
3 years, you can sell your losing investments to offset the capital gains.
Revised: November 20, 2009
