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 (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
The last trading date for 2013 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 2014, so any capital gains or losses on sale apply
to the 2014 tax year.
The last trading date for 2013 for US publicly traded stocks was December 26th. The US exchanges, such as NASDAQ, NYSE and CBOE, are not closed for Boxing Day.
Revised: May 04, 2014