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Trade and Settlement Dates

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Stocks, Bonds etc. -> Investing Tax Issues -> Trade date and settlement date

Trade Date vs Settlement Date, Last Trading Date for 2014

When investments such as stocks, bonds, etc. are purchased or sold, there are two important dates - the trade date, and the settlement date.

The trade date is the day on which the transaction occurs, and the settlement date is the day on which payment is made, and possession transfers from the seller to the buyer.  The settlement date is usually 3 business days after the trade date for stocks, or one business day after the trade date for call options and put options.  The buyer does not own the stock until settlement date.  This is important when the trade is made close to the ex-dividend date, or when the trade is made at yearend, but does not settle until after yearend.  The gain or loss on sale is recorded in the tax year of the settlement date.

IT133 Stock Exchange Transactions  - Date of disposition of shares (IT subsequently cancelled), was issued in November 1973 to clarify the issue of when ownership was transferred for tax purposes.  Prior to 1973 the trade date had been used, but IT133 confirmed that for the 1974 and later taxation years the settlement date is used as the date on which ownership is transferred to the buyer.  This clarification was necessary for transactions which had a trade date prior to year end and a settlement date after year end, so the transaction could be recorded in the appropriate taxation year.  Note that IT133 did not address whether the trade date or settlement date should be used for the foreign exchange rate to be used for conversion of purchases in foreign currencies.

Last Trading Date 2014

The last trading date for 2014 for Canadian publicly traded stocks is December 24th, and the exchanges close early, at 1 pm Eastern Time, which is 10 am Pacific Time.  The Canadian stock exchanges, such as the TSX, are closed on both Christmas Day (Dec 25th) and Boxing Day (Dec 26th).  Canadian stocks purchased or sold after this date settled in 2015, so any capital gains or losses on sale apply to the 2015 tax year.

The last trading date for 2014 for US publicly traded stocks is December 26th.  The US exchanges, such as NASDAQ, NYSE and CBOE, are not closed for Boxing Day.

 

Revised: November 25, 2014

 

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