Tax-Loss Selling on the TSX Venture and CSE: How It Works in 2026

Tax-loss selling is the year-end practice of selling shares at a loss to offset capital gains on the same year’s tax return. For a loss to count in 2026, the trade has to settle in 2026. Under T+1 settlement and this year’s holiday calendar, the last trade date is Wednesday, December 30, 2026.

The tax rules behind it

In Canada, half of a capital gain is included in taxable income. Capital losses offset capital gains. Under the rules summarized by RBC Wealth Management, a capital loss must first be applied against capital gains in the current year. Any remaining net loss can be carried back three years or carried forward indefinitely against capital gains.

That creates the incentive. An investor with a gain in one stock and a paper loss in another can sell the loser before year end and reduce the tax owed on the winner. All of this applies to shares held in non-registered accounts.

2026 settlement dates under T+1

Canada moved to T+1 settlement on May 27, 2024. A trade settles one business day after it is made. What counts for tax is the settlement date, not the trade date.

This year the calendar is tight. December 25 falls on a Friday, and TMX Group has scheduled Monday, December 28 as a market holiday in lieu of Boxing Day. TMX’s published settlement schedule for the holidays shows:

TMX Money’s tax-loss primer also advises placing trades by December 30. Only three trading days follow Christmas this year, which leaves little room to fix a missed order.

The superficial loss rule

The CRA denies a capital loss if the same or identical property is bought back too soon. RBC Wealth Management describes the test as follows. A superficial loss occurs when you, or someone affiliated with you, acquires the identical property within the period that begins 30 days before and ends 30 days after the settlement date of the sale, and still holds it at the end of that period.

Affiliated persons include a spouse or common-law partner, a corporation controlled by you or your spouse, and some trusts. A denied loss is usually added to the adjusted cost base of the repurchased shares, so the tax benefit is deferred. Buying the shares back in a registered account such as an RRSP or TFSA also triggers the rule.

The rule is limited to identical property. TMX Money’s primer notes that investors who want to keep market exposure sometimes buy a similar, but not identical, security or ETF during the window. Whether two securities count as identical is a question of fact, and the CRA decides it case by case.

For a sale on December 30, 2026 settling December 31, the 61-day window runs from December 1, 2026 to January 30, 2027. Buying the same stock on December 15 to “average down” and then selling the original lot at a loss on December 30 falls inside that window.

The math: what a loss is worth

Take a British Columbia investor in the top 2026 bracket, where the combined rate on capital gains is 26.75%. The investor has a $20,000 gain on one holding and a $20,000 unrealized loss on a TSX Venture stock.

• Without selling the loser: taxable capital gain is $10,000 (50% of $20,000). Tax at 53.50% is $5,350.
• Selling the loser by December 30: net capital gain is $0. Tax is $0.
• Tax saved: $5,350, or 26.75% of the $20,000 loss.

A loss taken in 2026 can instead be carried back to recover tax on gains from 2023, 2024 or 2025, or carried forward. The value depends on the investor’s rate and gains, not on the stock.

The historical pattern

Because small-cap shares on the TSX Venture Exchange and the Canadian Securities Exchange trade thinly, concentrated selling in the last weeks of the year can move prices more than it would in large caps. Research has looked at whether that shows up in returns.

• Canaccord Genuity research, as reported by Investing News Network in December 2025, found that stocks down more than 15% for the year underperformed the index by nearly 4% from mid-November to mid-December, then outperformed by 3.6% from mid-December to mid-January.
• Berges, McConnell and Schlarbaum, in the Journal of Finance in 1984, studied Canadian returns from 1951 to 1980. They found that January returns were higher than other months both before and after Canada started taxing capital gains, and that the effect was larger for smaller companies. Their conclusion was that tax-loss selling alone does not explain the January pattern.

The pattern is an average across many stocks and years. It does not hold every year or for any given company, and past seasonal returns do not predict future ones.

What to watch

• Wednesday, December 30, 2026: last trade date for 2026 settlement on Canadian exchanges.
• Monday, December 28, 2026: markets closed for Boxing Day in lieu.
• January 30, 2027: end of the superficial loss window for a sale settling December 31, 2026.
• TSX Venture Composite and CSE volumes in the second half of December.
• Your broker’s own year-end cut-off, which can be earlier than the exchange date for some account types.

Sources

• TMX: Settlement schedule for 2026 holidays
• TMX Money: A primer on tax-loss selling in Canada
• Advisor.ca: Avoid superficial loss problems with registered plans
• RBC Wealth Management: A tax perspective on year-end
• TaxTips.ca: Trade date versus settlement date
• TaxTips.ca: 2026 BC personal income tax rates
• Investing News Network: Mark these tax-loss selling dates on your calendar
• Berges, McConnell and Schlarbaum (1984), The Turn-of-the-Year in Canada, Journal of Finance

Frequently asked questions

What is the last day for tax-loss selling in Canada in 2026?

The last trade date is Wednesday, December 30, 2026. Canada uses T+1 settlement, and what counts for tax is the settlement date. A trade on December 30 settles December 31, 2026. A trade on December 31 settles January 4, 2027, which falls in the 2027 tax year. Markets are closed December 25 and December 28.

What is the superficial loss rule in Canada?

The CRA denies a capital loss if you, or someone affiliated with you, acquire identical property within the period from 30 days before to 30 days after the sale’s settlement date and still hold it at the end. Affiliated persons include a spouse. Repurchasing in an RRSP or TFSA also triggers the rule. The denied loss is usually added to the new cost base.

Can a capital loss be carried back or forward in Canada?

Yes. A capital loss must first be applied against capital gains in the current year. Any remaining net loss can be carried back three years or carried forward indefinitely against capital gains. A loss taken in 2026 could be carried back to recover tax on gains from 2023, 2024 or 2025, or carried forward to later years.

Related reading

• Flow-Through Shares Explained: How They Work and What They Cost
• Bank of Canada Rate Decisions in 2026 and What They Mean for Small Caps
• Canada and US Trade in 2026: Tariffs, Resources and What Changed

Chase Kazakoff, Micro Math Capital

Disclaimer

This content is published by Micro Math Capital, a brand of Apollo Shareholder Relations, for informational purposes only. It is not investment advice, a recommendation, or an offer or solicitation to buy or sell any security. Nothing here should be relied on for investment decisions. Readers should conduct their own due diligence and consult a registered investment advisor before making any investment.

Apollo Shareholder Relations provides paid investor relations, marketing, and communications services to publicly traded companies and may be compensated in cash or securities by companies in the sectors discussed. Where a company mentioned in this content is or becomes a client, Apollo may hold a financial interest in that company and its securities. This content is not independent research.

All facts and figures are drawn from public sources believed to be reliable, but accuracy is not guaranteed. Any forward-looking statements reflect current expectations only and actual outcomes may differ materially. Micro Math Capital and Apollo Shareholder Relations accept no liability for any loss arising from the use of this content.