What I Learned About Tax-Loss Selling Before December 31

Most of my investing happens inside my TFSA and RRSP, so for years I mostly ignored the phrase "tax-loss harvesting." This year I have a small non-registered account too, with one position sitting in the red, so I sat down with Wealthsimple's learn guide on the topic to figure out whether any of it applies to me. Here's how I understand it, in my own words.

The basic idea

Wealthsimple's guide describes it as "when you intentionally sell an investment for less than you paid for it." The realized loss can then be used to offset capital gains elsewhere. What clicked for me is that it only matters in a taxable account: inside a TFSA or RRSP there's no capital gains tax to offset in the first place, so a loss there doesn't help on my return. My TFSA losers are just... losers.

The 30-day rule I almost missed

The part I would have gotten wrong on my own is the superficial loss rule. As I read it, if I (or my spouse, or a corporation I control) buy the same or an identical investment within 30 days before or after selling it at a loss, the CRA denies the loss. It isn't gone forever: it gets added to the cost base of the replacement. But it doesn't help me this year, which is the whole point of doing it in November.

My first instinct was "sell it and buy it right back." That's exactly the move the rule is built to catch. From what the guide explains, the options are to wait at least 31 days before buying back, or to switch to something similar but not identical. The guide also points out that two ETFs tracking the exact same index likely won't cut it, which was news to me.

Timing matters more than I thought

The other detail I'm writing down: for a sale to count in 2026, it has to settle by December 31, not just be placed. Canadian stock trades generally settle one business day after the trade (T+1), so in practice the order needs to go in at least a business day before year-end. Between holiday closures and my own procrastination, I'd rather look at this in mid-November than on December 30.

Why I'm not rushing into it

Honestly, for my one small position the tax benefit is modest, and I like the holding for the long term. Selling just to book a loss means holding a substitute for a month, possibly paying a currency conversion cost, and accepting that the replacement could move differently. In my case I'm leaning toward keeping it and noting the idea for a year when the numbers are bigger. Losses can also be carried back three years or forward indefinitely, according to the guide, so there's no use-it-or-lose-it pressure on my end.

My short checklist

• Confirm the position is actually in a non-registered account.
• Check whether I (or my spouse) bought the same thing in the last 30 days, including through automatic contributions.
• Decide on a "similar but not identical" replacement, or accept being out for 31 days.
• Place the trade with at least one business day to spare before December 31.

None of this is tax advice; it's just how I read the rules for my own situation. If your situation is more complex, an accountant is the person to ask.

If you're curious about Wealthsimple for your own investing, the card above has the offer I used when I signed up. I'm sharing how I think about my own account, not telling anyone what to buy or sell.