Canadian tax law does not have an official "wash sale" rule like the US does, but the CRA does apply the superficial loss rule, which can disallow capital losses on NFTs and other digital assets if you repurchase substantially identical property within 30 days. If you sold an NFT at a loss and bought a similar or identical NFT within 30 days before or after the sale, this CRA rule may apply to you and could deny your tax loss deduction. Understanding this rule is critical for NFT traders who rely on loss harvesting strategies to reduce their overall tax burden. The superficial loss rule is found in section 40(2.1) of the Income Tax Act and applies whenever you realize a capital loss on any property, including NFTs and digital assets. Here's how it works: - You sell an NFT at a loss - You or an affiliated person (spouse, controlled corporation, or trust you control) buys the same or substantially identical NFT - The purchase happens within 30 days before or 30 days after the sale - The CRA disallows the capital loss and defers it When a loss is disallowed under the superficial loss rule, it's added to
Canada does not have a formal wash sale rule, but the superficial loss rule (section 40(2.1)) applies instead. This rule disallows capital losses on NFTs if you or an affiliated person buys a substantially identical NFT within 30 days before or after the sale. The disallowed loss is added to the cost base of the replacement asset.
The CRA has not published specific guidance for NFTs. Two NFTs from the same collection are likely not substantially identical. However, if you buy a replacement NFT with the same utility, collection tier, or market position, the CRA may argue they are substantially identical. Documentation of differences is crucial.
No, you don't lose it forever. The disallowed loss is added to the adjusted cost basis of the replacement NFT. When you eventually sell that replacement NFT without reacquiring it, the loss benefit is realized then. The loss is deferred, not forfeited.
Yes. The rule applies to you and affiliated persons, which includes your spouse and any controlled corporations or trusts. If your spouse purchases the NFT within 30 days, the loss is still disallowed to you.
Keep a detailed transaction log with purchase and sale dates, prices in CAD, wallet addresses, NFT contract details, and the specific attributes of each NFT. Document why any replacement NFT was not substantially identical. This evidence is vital if the CRA audits your claims.