In Canada, capital losses cannot be used to offset regular employment, business, or investment income like interest or dividends. Instead, capital losses can only be applied against capital gains you've realized in the same year or carried forward to future years to reduce capital gains taxes. This is an important distinction because it means if you sell an investment at a loss, you cannot use that loss to reduce your salary or other types of income on your tax return. The CRA treats capital losses differently from other types of losses. Here's what you need to know for the 2026 tax year: Capital losses are limited to offsetting capital gains only. If you realize a capital loss on the sale of stocks, real estate, or other capital property, that loss can only be deducted against capital gains you've earned. It cannot reduce your employment income, rental income, or other sources of non-capital income. For example, if you sell an investment portfolio at a $10,000 loss but earned $50,000 in capital gains elsewhere, you can use the loss to offset your gains.
No. Capital losses can only offset capital gains, not employment income, business income, or other types of income. If you have a capital loss with no capital gains to offset it, you cannot use the loss to reduce your salary or wages.
You can carry a capital loss forward indefinitely with no time limit. You can apply it against capital gains in any future year. You can also carry losses back up to three years to offset prior capital gains.
No. Capital losses inside a TFSA or RRSP cannot be claimed for tax purposes because these accounts are tax-sheltered. You can only claim losses on investments held in non-registered accounts.
The CRA does not allow you to claim a capital loss if you repurchase substantially identical property within 30 days before or 30 days after the sale (61 days total). This prevents using losses while maintaining the same investment position.
The inclusion rate affects how much of your capital gains are taxable, but losses offset gains dollar-for-dollar before the inclusion rate is applied. If you have $10,000 in gains and $3,000 in losses, you report $7,000 in net gains, which is then subject to the 50% or 66.67% inclusion rate.