How does the superficial loss rule work if my client sells at a loss and they or their spouse buy the shares back?
In 2026 the superficial loss rule denies your client's capital loss when they, or an affiliated person such as a spouse, buy the same or identical property within 30 days before or after the sale and still own it 30 days after. The denied loss is added to the ACB of the replacement property under ITA 53(1)(f).
Which buybacks trigger the superficial loss rule?
A loss is superficial when your client, or a person affiliated with your client, acquires the same or identical property during the period from 30 days before to 30 days after the sale, and your client or that person still owns it, or has a right to acquire it, at the end of that period laws-lois.justice.gc.ca. Paragraph 40(2)(g)(i) then sets the loss to nil
laws-lois.justice.gc.ca. Who buys decides where the loss ends up.
| Who acquires identical property in the window | Caught? | What happens to the loss |
|---|---|---|
| Your client, still holding it on day 30 | Yes | Denied, added to your client's ACB of the new shares |
| Your client's spouse or common law partner | Yes | Denied, added to the spouse's ACB of the shares the spouse bought |
| A corporation your client or the spouse controls | Yes | Denied, added to the corporation's ACB |
| A trust where your client is a majority interest beneficiary, including a TFSA or RRSP set up as a trust | Treat as yes | Denied, and the ACB bump sits inside the plan where it never produces a deduction |
| Your client's adult child or parent | No | Allowed: they aren't affiliated persons under 251.1(1) |
| Your client, who sells the replacement before day 30 ends | No | Allowed: nobody owns it at the end of the window |
| Your client moves the losing shares into a TFSA or RRSP in kind | Different rule | Nil under 40(2)(g)(iv), with no ACB addition |
The affiliated pairings come from subsection 251.1(1): an individual and a spouse or common law partner, a corporation and the person who controls it (or that person's spouse), a partnership and its majority interest partner, and a trust and its majority interest beneficiary laws-lois.justice.gc.ca. Children, parents and siblings are not on the list.
How do you count the 61 day window?
Count 30 calendar days back and 30 calendar days forward from the sale date, so the window covers 61 days including the sale day canada.ca. Both conditions must be met: the purchase falls inside the window, and the property is still held at its end.
| Sale date | Window opens | Window closes | First safe day to buy back |
|---|---|---|---|
| November 3, 2026 | October 4, 2026 | December 3, 2026 | December 4, 2026 |
| December 1, 2026 | November 1, 2026 | December 31, 2026 | January 1, 2027 |
The window runs backward too. A client who doubles up (buys a second block, then sells the original block at a loss within 30 days) is caught, because the new shares were acquired inside the window and are still held at the end.
A right to acquire the property counts as identical to the property itself, so buying a call option on the same shares inside the window can trigger the rule laws-lois.justice.gc.ca.
Worked example: a denied $10,000 loss moves into the new ACB
Your client holds 1,000 shares of one public company with an ACB of $30,000 in a non registered account.
| Date | Event | Math | Result |
|---|---|---|---|
| November 3, 2026 | Sells 1,000 shares for $20,000 | $20,000 minus $30,000 | Loss of $10,000 |
| November 20, 2026 | Buys 1,000 shares back for $21,000 | Inside the window | Loss becomes superficial |
| December 3, 2026 | Still holds the 1,000 shares | Both conditions met | Loss on the 2026 return: $0 |
| December 3, 2026 | New ACB | $21,000 plus $10,000 | $31,000 ($31 a share) |
| March 2027 | Sells all 1,000 for $27,000 | $27,000 minus $31,000 | Capital loss of $4,000, allowable $2,000 |
The $10,000 isn't lost. Paragraph 53(1)(f) adds it to the ACB of the substituted property laws-lois.justice.gc.ca, so it comes back when the new shares are sold. Check the total: your client paid $51,000 and received $47,000, a $4,000 economic loss, and that's exactly the loss reported in 2027. The allowable portion uses the 50% inclusion rate, which still applies for 2026 (see the inclusion rate page).
The cost is timing. A client who wanted the loss against 2026 gains gets it a year later, in 2027, unless they waited until December 4 to buy back. The per share ACB math follows the averaging rule for identical shares, covered on the ACB page.
What happens when the spouse, a holding company or a TFSA buys?
A spouse buying identical shares in the window makes your client's loss superficial, and the CRA confirms that you and your spouse or common law partner are affiliated canada.ca. Paragraph 53(1)(f) adds the loss to the ACB of the property whose acquisition made the loss superficial, so the bump lands on the spouse's shares, not your client's
laws-lois.justice.gc.ca. Using a spouse's account doesn't harvest the loss, it moves it to the spouse.
A corporation controlled by your client or the spouse is affiliated too, and "controlled" means controlled directly or indirectly in any manner whatever laws-lois.justice.gc.ca. A holding company buying the shares back carries the denied loss in its own ACB.
Registered plans are the trap. The affiliated list doesn't name an RRSP or TFSA, but it does affiliate a trust with its majority interest beneficiary, and the Act describes these plans as a trust governed by the plan, with your client as beneficiary or annuitant laws-lois.justice.gc.ca. That reading rests on paragraph 251.1(1)(g), and neither T4037 nor the CRA's capital losses page addresses plan buybacks, so treat a buyback inside your client's own TFSA or RRSP as caught. The ACB addition then lands inside the plan, where it never reduces a taxable gain, so the loss is effectively gone.
Moving the losing shares straight into a TFSA, RRSP, RRIF or FHSA is a separate rule. Subparagraph 40(2)(g)(iv) makes a loss on a disposition to a trust governed by one of those plans nil, and there's no ACB addition for it laws-lois.justice.gc.ca. Have the client sell in the open account first, wait out the window, then contribute cash.
When does the superficial loss rule not apply?
The definition in section 54 excludes deemed dispositions and a few specific events laws-lois.justice.gc.ca. The CRA lists the cases where the loss is not superficial
canada.ca:
| Situation | Why the rule is off |
|---|---|
| Your client became or ceased to be a resident of Canada | Deemed disposition on entry or departure |
| Your client changed the use of the property | Deemed disposition under 45(1) |
| The owner died | Deemed disposition at death |
| An option expired | Excluded by the definition |
| Your client became or ceased to be exempt from tax within 30 days after the sale | Excluded by the definition |
| A shareholder appropriated the property on a corporate winding up | Excluded by the definition |
Corporations, trusts and partnerships follow subsections 40(3.3) and 40(3.4) instead. When one of them sells non depreciable capital property at a loss and it, or a person affiliated with it, holds identical property at the end of the window, the loss is suspended: it stays with the seller and is recognized later, for example once a 30 day period passes in which neither the seller nor an affiliated person owns the substituted property laws-lois.justice.gc.ca. The loss is not added to the buyer's ACB in that case
canada.ca.
Identical means the same in all material respects, so a buyer wouldn't prefer one over the other. Shares of the same class of one corporation are the standard case, while voting and non voting shares with different rights are not identical canada.ca. Whether two funds from different issuers are identical is a question of fact the CRA's guides don't settle.
Sources
What if my client buys back fewer shares than they sold?
Then only part of the loss is usually denied. Paragraph 40(2)(g) sets a loss to nil only "to the extent" it is a superficial loss laws-lois.justice.gc.ca, so units sold with no matching buyback in the window keep their loss. The CRA's guides don't publish the allocation method, so keep a schedule showing how sold and bought units were matched.
Does the superficial loss rule apply to crypto?
Yes. It applies to any capital property, and crypto held on capital account is capital property. Units of the same coin are identical, so a buyback within the window denies the loss and adds it to the ACB of the new coins, as shown in the crypto tax example.
Can a denied superficial loss be carried back to an earlier year?
No. A superficial loss can't be deducted at all; it moves into the ACB of the replacement property canada.ca. Only a net capital loss that is actually allowed can be carried back three years or forward indefinitely, covered on the loss carryover page.
Can my client sell at a loss and have their adult child buy the same shares?
Yes, the loss is not superficial. Subsection 251.1(1) affiliates an individual only with a spouse or common law partner among other individuals, so an adult child's purchase doesn't trigger the rule laws-lois.justice.gc.ca. If your client funds the purchase, look at the attribution rules separately.
General information for the tax year shown, not advice for a specific client. Confirm the facts before you file or remit.