Investing

Question regarding the 30 day loss rule

  • Last Updated:
  • Aug 5th, 2021 5:56 pm
[OP]
Sr. Member
Jan 26, 2020
643 posts
155 upvotes
Canada

Question regarding the 30 day loss rule

Say I bought 1000 shares at $100/share on Jan 1. Then it dips to $90 and I sell on Jan 5. It continues to dip so I grab the same number of shares at $80 on Jan 10. A few months later I sell everything at $110. I would at first think I would be responsible for tax on a 10% gain. Seems straight forward. But would that be correct? Or would the $100 to $90 part be ignored because it was within 30 days and just the $80 to $110 part be considered? For someone churning equities this can have a dramatic difference.

And what if I took the same scenario of 1000 x $100/share purchase on Jan 1 and I sell at $90 on Jan 5. (Loss of $10,000). Than I buy the same number of shares when the price is $80. It sinks further and on Jan 10 I sell at $75. (Loss of $5,000). It looks like a loss of a total of $15,000 but is it really being that I did this under 30 days? (I haven't included commission costs to keep things simple.)
4 replies
[OP]
Sr. Member
Jan 26, 2020
643 posts
155 upvotes
Canada
Yes I see why you would ignore trade 2 and 3. If the loss can't be claimed and there is no gain there is really nothing taxable or relevant.
I should have pointed out this is just one equity we're talking about.

More examples:
You buy 1000 shares of AAA stock for $100 and sell for $90. ($10,000 loss)
You buy 1000 shares of BBB stock for $100 and sell for $110. ($10,000 gain)
No tax is incurred as the 2nd cancels the first?

But if you had bought AAA stock again (after 1 week) at $90 and it was sold at $100 a few days later would you be really taxed on $10,000 gain and would they only look at the second one and ignore the first because it occurred within 30 days? That's what I'm worried about.
Member
May 15, 2019
356 posts
362 upvotes
GWN
buysellbuy wrote: Unfortunately the CRA guide for superficial loss and ACB calculation is not clear on this.
https://www.canada.ca/content/dam/cra-a ... 37-20e.pdf

Here is my view:

The brokerage would report 4 transactions to CRA and provide tax slips for the following:
1. 100 buy
2. 90 sell
3. 80 buy (within 30 days)
4. 110 sell

Trades 2 and 3 are disregarded as they are a superficial loss. They did not happen.

Transaction 1 and 4 would be entered when filling out taxes.

If you change the ACB to reflect trades 2 & 3 it will not match what the broker sent to CRA.
1. Buy @100, ACB is 100
2. Sell @90, loss of 10 (however will be Superficial as per Transaction 3.)
3. buy @ 80, ACB is 80, Transaction 2. is denied loss and Superficial loss of 10 is added back to ACB, now ACB is 90
4. Sell @110, gain is 110 - 90 (ACB) = 20 gain
[OP]
Sr. Member
Jan 26, 2020
643 posts
155 upvotes
Canada
It makes a lot more sense focusing on the ACB I must say. Those numbers do seem quite fair to CRA's benefit.

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