Selling crypto at a loss and buying it back within 30 days usually denies the loss under the CRA superficial loss rule. The denied amount isn’t gone. It is added to the adjusted cost base of the coins you bought back.
The Canada Revenue Agency (CRA) treats crypto-assets as property, so the same capital gains rules apply to them as to shares. That includes this one. Its guide says only that you can deduct half of a capital loss, and only against taxable capital gains. The superficial loss rule decides whether there is a loss to deduct at all.
The 61-day window
The rule looks at a period that starts 30 days before the sale and ends 30 days after it. That is 61 days with the sale day in the middle. A loss is superficial if you, or a person affiliated with you, acquire the same or identical property in that period and still own it when the period ends. The CRA audit manual says the law deems the capital loss to be nil in that case.
Notice the direction. The order can run either way, so buying first and selling later can trigger it too. If you added to a position on day 10 and sold part of your holding at a loss on day 25, the earlier purchase can count as the replacement.
A quick example
You bought 1 bitcoin for $60,000 and sell it for $50,000, a $10,000 loss. Twelve days later you buy 1 bitcoin for $51,000 and hold it past the 30 days. The $10,000 loss is denied. Your new cost base is $51,000 plus $10,000, so $61,000.
Nothing is lost for good, only postponed. If you later sell that coin for $65,000, your gain is $4,000, and half of it, $2,000, is taxable. Without the rule you would have claimed a $10,000 loss now and reported a $14,000 gain later.
What happens if you rebuy only part
The rule can bite partly. Say you sell 10 coins at a $2,000 loss and buy back 4 within the window, keeping them. Only the share of the loss that matches the coins you kept is denied: 4 of 10, so $800. The other $1,200 is a normal capital loss you can use this year. The $800 goes onto the cost of the 4 replacement coins.
A tax professional can confirm the exact wording in the Income Tax Act for a large or messy file.
Who else counts
You are not the only buyer that matters. A purchase by a spouse or common-law partner, or by a corporation you control, can trigger the rule as well. The law calls these affiliated persons, and the CRA points to subsection 251.1(1) of the Act for the full definition.
So a plan where you sell at a loss and your partner buys the same coin on the same day doesn’t work. Check marginal tax rate effects before you sell only for the tax result, because a denied loss saves nothing this year.
Is a different coin identical property
Identical property means the same in all material respects, so that a buyer would have no preference between the two. Selling one crypto-asset and buying a different one is generally not the same thing, since each crypto-asset is its own property. Selling bitcoin and buying the same amount of bitcoin back is a clear match.
The CRA has not published a detailed crypto ruling that we could find, so borderline cases, such as wrapped versions of a coin, are uncertain. Ask a professional before relying on a swap.
Cost base afterward
When coins of the same type are bought at different times, the CRA capital gains guide says to work with the average cost of the group. A denied loss raises the total cost, and so the average, of the coins you hold. Keep a note of each denied amount, with the date and the number of coins it was added to.
Use the capital gains tax calculator once the adjusted figure is known.
Ways people stay outside the window
The simplest is to wait. If you sell at a loss and rebuy on day 31 or later, and you didn’t buy the same coin in the 30 days before the sale, the rule doesn’t apply. The cost is market risk: the price may move a lot while you wait.
Another is to skip the rebuy and hold cash, or move into a different asset. See also the Income Tax calculator, and the full set of tax calculators.
Sources
- CRA guide T4037, Capital gains
- CRA, Income Tax Audit Manual, chapter 29
- CRA, Reporting income from crypto-asset transactions
Common questions
Is a different coin identical property?
Is the denied loss lost forever?
Does the rule apply across the year end?
Last reviewed: . Figures come from the official sources listed above. How we check the numbers and our editorial policy.