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Trade Date & Settlement Date, Last Trading Date
Trade Date vs Settlement Date - Settlement Day T+1 Starting May 2024
Stock Market December Holiday Closures 2023
References re Stock Market Trading Days and Hours
Canada Revenue Agency (CRA) Resources
Trade Date vs Settlement Date - Settlement Day T+1 Starting May 2024
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 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.
The settlement date is one business day after the trade date for call options and put options.
For trades of equities, corporate and long-term government bonds, mutual funds and exchange-traded funds (ETFs):
 | Effective May 27, 2024 in Canada and May 28, 2024 in the US, settlement date will be 1 business day after the trade date. See RBC Investor Services Transition to T+1. US markets are closed on May 27, 2024. This means in both the US and Canada, Friday May 24, 2024 will be the last T+2 trade date. |
| Effective September 5, 2017, the settlement date, which previously was 3 business days after the trade date for stocks, is 2 business days after the trade 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 2023
The last trading date for 2023 for Canadian and US publicly traded stocks that settle 2 days after the trading date is Wednesday, December 27th, in order to record the gain or loss in the 2023 taxation year. Stocks purchased or sold after this date are settled in 2024, so any capital gains or losses on sale apply to the 2024 tax year instead of to the 2023 tax year.
Since options settle the day after trading date, the last day to trade options in order to record the gain or loss in the 2023 taxation year is Thursday, December 28th. However, the timing of options gains and losses is a little more complicated. See Tax Treatment of Income from Investments in Call and Put Options.
Stock Market December Holiday Closures 2023
The Canadian stock exchanges, such as the TSX, are closed on both Christmas Day and Boxing Day, which fall on Monday and Tuesday in 2023, so the stock markets are closed on those days.
The US exchanges, such as Nasdaq, NYSE and CBOE, are not closed for Boxing Day, but will be closed on Monday, Dec 25th for Christmas Day.
References re Stock Market Trading Days and Hours
Toronto Stock Exchange Calendar
Nasdaq 2023 Stock Market Holidays Hours
TaxTips.ca Resources
What does the Income Tax Act say about the exchange rate?
Reporting foreign income and expenses
Canada Revenue Agency (CRA) Resources
Income Tax Folio S5-F4-C1, Income Tax Reporting Currency
Revised: January 19, 2024