Superficial Loss Exceptions in Section 54
17 October 2026 · en-CA · Educational information · No affiliate links
Educational information only. Not tax, legal or investment advice. We are not the CRA and are not affiliated with it. Check canada.ca and consider a qualified Canadian tax professional. Sources checked October 17, 2026. Anything marked expected should be re-checked. Examples use made-up numbers. This page contains no affiliate links.
Short answer: The definition of "superficial loss" in section 54 of the Income Tax Act sets the two tests (acquisition within 30 days before or after, and ownership or a right to acquire at the end of the period) and then lists dispositions to which it does not apply. Most of them are specialised, such as deemed dispositions on death or on leaving or entering Canada. We found no CRA statement connecting these exceptions to ordinary crypto trading, so most readers should expect the rule to apply to a plain sale at a loss followed by a repurchase.
The exceptions listed (Act current to 2026-09-30)
The rule does not apply to:
- certain deemed dispositions listed in paragraph (c) of the definition: subsection 45(1) (change in use), section 50, section 70 (death), subsection 104(4), section 128.1 (becoming or ceasing to be resident in Canada), paragraph 132.2(3)(a) or (c), subsections 138(11.3), 138.2(4) and 142.5(2), section 142.6, subsections 144(4.1), (4.2) and 149(10), and section 48 as it read before 1993;
- the expiry of an option;
- a disposition to which paragraph 40(2)(e.1) applies;
- a disposition by a taxpayer that was subject to a loss restriction event within 30 days after the disposition;
- a disposition by a person that, within 30 days after the disposition, became or ceased to be exempt from tax on its taxable income;
- a disposition to which subsection 40(3.4) or 69(5) applies. Subsection 40(3.4) is the parallel rule for corporations, trusts and partnerships: their loss is treated as nil and recognised later, rather than added to the cost of the substituted property (subsection 40(3.3) applies only to those transferors). An individual's ordinary sale is not covered by it.
Two drafting points in the same definition
- A right to acquire a property (other than a right held only as security from a mortgage or similar obligation) is deemed identical to the property.
- Whether two crypto-assets are "identical" is a factual question; we cover it in the main rule page.
- Under paragraph 40(2)(g), only the part of a loss that is a superficial loss is nil ("to the extent that it is").
What this means (our reading)
If you sold at a loss and your own repurchase or an affiliated person's falls in the window, check whether your disposition is one of the exceptions above before assuming the loss is allowed (affiliated persons). Most individuals' sales are not in this list.
Made-up example
A person sells at a loss on December 15 and buys the same coin on December 20. The sale is an ordinary sale, not one of the listed dispositions, so the tests in the definition apply.
Related
Can I buy back after a loss? · Tax-loss selling window · US wash sale vs Canada
FAQ
Does death or leaving Canada trigger the rule? The listed sections are exceptions to it; their own effects are outside this page.
Does the CRA say crypto is identical property? Not in the pages we read.
What we could not verify
- We did not read the content of the individual sections cross-referenced in paragraph (c); the CRA summarises the common ones (death, becoming or ceasing to be resident, change in use, expiry of an option, winding-up). Paragraphs 40(2)(e.1) and 40(3.3)-(3.4) were read (e.1 makes a loss on a debt transferred to a related person nil). Subsection 53(1)(f) and section 69(5) were not read.
- How the CRA treats crypto identity (not addressed in the Act definition).
- Any amendments after 2026-09-30 (the Act version read is current to that date).
- Provincial rules.
Sources (official)
- Department of Justice Canada, Income Tax Act, s. 54, definition of 'superficial loss' (Act current to 2026-09-30, last amended 2026-06-18) — https://laws-lois.justice.gc.ca/eng/acts/I-3.3/section-54.html (read in full 17 October 2026)