Q: We are considering taking a capital loss on an underperforming stock and using it to offset capital gains. The suggestion is to buy a similar stock, but not the identical stock. But is there anything stopping us from buying the identical stock in a spousal investment account?
—Rietta Osso, Brockville, Ont.
A: Yes. The Canada Revenue Agency. Rona Birenbaum, a CFP with Caring for Clients explains that, “an investment sold at a loss in a taxable account is considered a superficial loss if the identical shares are repurchased within 30 calendar days (before or after the disposal) by you, your spouse, or certain other persons affiliated with you.” If the CRA considers it a superficial loss, then it cannot be a capital loss deduction and you will get no tax benefit. The CRA also prevents you from skirting the rule. So, no buying the same stock in a spouse’s investment plan. Instead, Birenbaum suggests “measuring the risk of not owning the investment for a 30-day period.” While the risk might be worth it, trying to break the CRA rules isn’t. While I don’t like superficial when it comes to my friends, the CRA goes one step further and actually penalizes it.
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