Transfer Capital Losses To Your Spouse

Transfer Capital Losses to a Spouse

Using the superficial loss rules, capital losses can be transferred to a spouse or common-law partner by selling the loss shares, and having your spouse purchase those shares within 30 days (before or after you sell the shares).

You are denied the superficial loss (see above), but the loss amount is used to increase the cost basis of your spouse's investment. Your spouse must hold the shares for more than 30 days after your disposition for this to work.

Losses will also be disallowed if shares are transferred to a Registered Retirement Savings Plan (RRSP) or to a Tax Free Savings Account (TFSA) at a loss.

You may decide you have a good reason to make a transfer of a loss investment to this type of account. If so, when completing your tax return, do not enter this disposal on your Schedule 3, as the loss cannot be claimed.

LOSSES WITHIN THE TFSA

If shares are disposed of at a loss inside your TFSA, there will be no superficial loss if the shares are repurchased within the TFSA within 30 days, as gains and losses in a TFSA are not taxable or deductible.

If shares in your TFSA are in a loss position and you transfer them out of the TFSA to a non-registered account, superficial loss rules have no effect on this transaction.

The market value at the time of the transfer will become the ACB of the shares in your non-registered account.