superficial loss how to report Superficial loss ?

[samuelyoung]

I sold a stock at a loss and my spouse bought the same stock within 30 days and trigerred a  Superficial loss.   How shall I and my spose report the transactions  to CRA such that they have  records of  such capital loss (that is supposed to be transferred to my spouse) ?    If I report my capital loss on my Schedule 3 , that will be wrongly deducted from my overall capital gain.

any advice will be highly appreciated !

 

[Geo123]

Hello samuelyoung,

 

A superficial loss can occur when you dispose of capital property for a loss and both of the following conditions are met:

 

    You, or a person affiliated with you, buys, or has a right to buy, the same or identical property (called "substituted property") during the period starting 30 calendar days before the sale and ending 30 calendar days after the sale.

    You, or a person affiliated with you, still owns, or has a right to buy, the substituted property 30 calendar days after the sale.

Is to prevent the deduction of artificial losses created on paper by people who are not dealing at arm’s length, meaning two people who not fully independent from one another. These are rules you should know if you are buying or selling capital property

You can't claim a capital loss if you or someone related (spouse/children) buy back the same shares (sold for a loss) within 30 days of the transaction date.

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-127-capital-gains/capital-losses-deductions/what-a-superficial-loss.html

[samuelyoung]

Hi Geo123,

thanks for the explanation.  Understand I can't claim a capital loss,  but such loss can be added to the ACB of the same stock  that my spouse bought during that 30 days period.

So am I correct to say that there is no action for me required, and the only action is have my spouse to add that amount of loss  to her  ACB of that same stock when she sold it in future ?

 

thanks again.

 

 

 

 

[Maggie3]

Hello samuelyoung,

Hello,

Please refer to the link below from the CRA on superficial losses:

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/capital-losses-deductions/what-a-superficial-loss.html

 

[JohnA]

A superficial loss is not reported because, well, it’s superficial!  your spouse just sets his/her ACB appropriately. Now the problem you might have is your financial institution not knowing the correct ACB in this case. You might be able to have them correct the ACB they have, so that the T5008 ultimately issued when your spouse sells is correct. Alternatively keep track of it yourself and override or delete the slip when your spouse eventually sells the security.

[samuelyoung]

Thanks !

On 2/25/2023 at 7:02 AM, Geo123 said:

Hello samuelyoung,

 

A superficial loss can occur when you dispose of capital property for a loss and both of the following conditions are met:

 

 

 

    You, or a person affiliated with you, buys, or has a right to buy, the same or identical property (called "substituted property") during the period starting 30 calendar days before the sale and ending 30 calendar days after the sale.

    You, or a person affiliated with you, still owns, or has a right to buy, the substituted property 30 calendar days after the sale.

 

Is to prevent the deduction of artificial losses created on paper by people who are not dealing at arm’s length, meaning two people who not fully independent from one another. These are rules you should know if you are buying or selling capital property

 

You can't claim a capital loss if you or someone related (spouse/children) buy back the same shares (sold for a loss) within 30 days of the transaction date.

 

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-127-capital-gains/capital-losses-deductions/what-a-superficial-loss.html

 

On 3/17/2023 at 7:04 AM, JohnA said:

A superficial loss is not reported because, well, it’s superficial!  your spouse just sets his/her ACB appropriately. Now the problem you might have is your financial institution not knowing the correct ACB in this case. You might be able to have them correct the ACB they have, so that the T5008 ultimately issued when your spouse sells is correct. Alternatively keep track of it yourself and override or delete the slip when your spouse eventually sells the security.

Thanks !