A capital loss counts for the 2026 tax year only if the sale settles by December 31, and under T+1 settlement the last trade date is December 30. That leaves 69 days. The window opens in a market with few obvious losers: the S&P/TSX composite was up about 21% over 12 months as of October 20, according to Trading Economics.
The ten largest S&P/TSX 60 components by market capitalization are all above their level of a year ago, from Enbridge at 1.36% to Suncor at 105.36%. The five largest banks, Royal Bank, TD, Scotiabank, BMO and CIBC, sit between 34.03% and 52.71%.
A loss depends on the investor adjusted cost base, not on the one-year move. A position bought near a peak, or added in several lots at different prices, can sit below its adjusted cost base while the stock is higher than it was a year ago. Harvesting season is therefore a position-by-position exercise, and it only has value in the right account.
Only Non-Registered Accounts Can Use the Loss
Tax-loss selling applies to non-registered accounts: personal, joint and corporate investment accounts, and trusts. Losses inside an RRSP, TFSA, FHSA, RESP or RDSP have no tax value, because gains inside those accounts are not taxed in the first place.
Capital losses offset only capital gains, never employment, business or rental income. Only half of a loss is allowable, matching the 50% inclusion rate for individuals in 2026. The proposed increase of the inclusion rate to two-thirds on gains above $250,000 was cancelled on March 21, 2025.
An allowable loss that exceeds the year gains is not wasted. It can be carried back three years on Form T1A against gains reported for 2023, 2024 or 2025, or carried forward indefinitely against future gains on line 25300 of the T1 return. Losses are reported on Schedule 3.
Corporate investment accounts and trusts follow the same logic with one constraint: a loss realized inside an entity can only be used by that entity. A personal loss cannot offset a corporate gain, and the reverse is also true.
The 61-Day Window That Voids the Loss
The superficial loss rule in the Income Tax Act denies a loss if the investor, or a person affiliated with the investor, acquires the same or an identical security within 30 days before or 30 days after the sale. With the sale day itself, the window is 61 days. A repurchase on day 31 or later falls outside it.
Affiliated persons include a spouse or common-law partner, a corporation the investor controls, and a trust in which the investor holds a majority interest as beneficiary. A repurchase in a spouse account or a controlled corporation voids the loss as surely as one in the same account. Automatic purchases, including dividend reinvestment plans, count as acquisitions, and a lot bought three weeks before the sale counts as much as one bought after it.
The consequence depends on where the repurchase lands. In a non-registered account, the denied loss is added to the adjusted cost base of the new shares and recovered on a later sale. In an RRSP or TFSA, the loss is lost permanently.
Timing creates the planning decision. A sale completed by the end of October clears its 30-day window by the start of December, leaving room to hold the same security again before year end. A sale made on December 30 cannot be repurchased until the window runs out at the end of January 2027.
What a Loss Is Worth Depends on Where the Investor Files
At the top bracket, a realized capital loss recovers between 22.25% of its size in Nunavut and 27.40% in Newfoundland and Labrador, so $10,000 of losses is worth between $2,225 and $2,740 depending on the province or territory.
Rates apply above the top-bracket income threshold, $258,482 federally, with higher thresholds in British Columbia, Alberta, the Yukon and Newfoundland and Labrador. Capital losses offset capital gains only and are available only in non-registered accounts.
Those rates apply only above the top-bracket threshold: federal taxable income over $258,482 in most jurisdictions, with higher thresholds of $266,000 in British Columbia, $370,000 in Alberta, $500,000 in the Yukon and $1.14 million in Newfoundland and Labrador. An investor in a lower bracket recovers less per dollar of loss. In Ontario, the largest market, the top rate on a capital gain is 26.77%, which puts $10,000 of losses at $2,677.
The Gain Side of the Ledger
A loss is worth only what it offsets. Investors who rebalanced out of bank and energy winners this year, sold a business or a property, or realized gains from a concentrated position have gains to absorb it. The Alternative Minimum Tax is a separate calculation that can apply in years with large realized gains.
The planning sequence runs in a fixed order: confirm the realized gains for the year, find positions below adjusted cost base in non-registered accounts, check every account an affiliated person controls for the same security, and place the trades with enough room before December 30. A loss that fails any one of those steps has no tax value.