Tax loss harvesting is the strategy whereby assets in non-registered accounts are sold to generate a capital loss1. These losses can be used to offset capital gains, either this year, in previous years (up to three years back), or in future years (forever)2.
Since CRA uses the settlement date of your asset sale, and since most (all ?) brokers take a day to settle a trade, this means to get your capital loss in fiscal 2025 you have to sell by December 30 to settle on December 31, the last business day of 2025.
After the current buoyant year in the markets, there’s probably not too many examples of this, but if you bought bonds in 2022…. ↩︎
I am not a lawyer, accountant or tax expert. Your situation may be a lot different than mine. Seek professional guidance if needed.
Part 1 of this blog is found here, Part 2 is here, and Part 3 is here.
Current Status or Why is the CRA so dysfunctional?
Yesterday, I received a series of emails1 from CRA (I had registered for electronic notifications for all things pertaining to the estate, which I highly recommend2). Two of the emails (totally identical) informed me that the address of the estate had changed (what?!!?) and one email, reading very carefully, I think was telling me that a Notice of Assessment for the Estate return had been completed. Here, judge for yourself, this is what the email looked like:
The Canada Revenue Agency (CRA) sent new mail online to ESTATE OF xxx called: Notice of assessment This mail may require your attention. If you have My Trust Account, sign-in via Represent A Client and click on “Mail” to read the mail. If you signed up to receive mail online but don’t have My Trust Account, go to the CRA web page to register.
Ok, I am going to rant a little bit at this point in time about how inept this communication is.
Why is it so hard for the CRA to send email communications that don’t sound like form letters?
Here’s how a normal human might write this: “A Notice of Assessment has been completed for your estate account. Login to Represent a Client3 using your Rep ID and the Trust Account Number to view it.“
Why doesn’t CRA know that I have a My Trust account? Of course I do, that’s how you’re emailing me about matters pertaining to the estate.
Why is no detail offered around where to register for a My Trust account? (“The CRA web page” is about as helpful as saying “Google it”4).
Of course, this is all nit-picking. My biggest beef is that this Notice of Assessment is being posted 17 weeks after they cashed the cheque for taxes owing on the estate return. In a world where we have self-driving cars how is it ok that it takes 4 months to feed a form into some software somewhere? And this is normal, per the CRA website.
Of course, it gets better. I now go to login to My Trust Account (a term I hadn’t heard before, it’s accessed the same way as you Represent a Client), and I see that the address of the estate is correct (phew), but there’s no indication of any Notice of Assessment, and the status message concerning the T3 that was showing up a week ago has disappeared. Clicking through to the “Balances” portion generates a vague error message.
Perhaps it’s helpful to explain what I expected to see at this juncture:
An electronic Notice of Assessment
A balance of zero
Not hard, right?
And so, off to the CRA call centre I went. Speakerphone? Check. Coffee? Check.
After listening to the various options (which take a really long time to work through, especially since one has to listen to messages about My Account and being nice5) I did reach a human in about 10 minutes, which is actually pretty good. Lori was pleasant and helpful, but after about 50 minutes of various holds and questions asked and answered, Lori decided that this was actually a problem for the digital services team to handle. And so I was transferred. I crossed my fingers, since what often happens at this stage is to either get disconnected or punted to the back of a 2 hour queue. Instead, I was connected to another pleasant and helpful agent immediately.
In less than 10 minutes, Sandra had an answer for me: the reason I couldn’t see the Notice of Assessment that was posted was because the estate, in CRA’s eyes, had ceased to exist. The final return was successfully submitted, the balance was zero and so online access was clearly no longer needed.
You can’t make this stuff up
And so, I therefore needed to wait for a paper Notice of Assessment delivered via snail mail which could take anywhere up until mid-November, per the helpful agent.
Next steps
Patience in wrapping up an estate, as I hope this post has illustrated, is an absolute requirement. Even if you do all the things right like
filing on time
using CRA’s e-services like My Account, Represent a Client and My Trust Account
paying your balance promptly
You can still expect lengthy, CRA-imposed delays.
Once I get the paper Notice of Assessment, my accountant tells me filing for a Clearance Certificate (form TX19) is fast. But once again, you’ll have to deal with CRA’s service standard, which is currently stated to be 120 calendar days from form reception (4 months in human terms).
If all goes well, I should be done about a year after I filed and paid the two tax returns (final return and estate return) with CRA; these delays are all CRA-imposed. Instead of talking about non-stories like the $660k tax bill6, perhaps the Canadian media would prefer to take a closer look at how Canadians are being served (or not) by the CRA when it comes to estates.
Especially given how unreliable snail mail has become with labour disruptions and whatnot. ↩︎
Represent a Client is a super-useful CRA service if you’re a financial caregiver. I used it when my parents were alive to help with tax matters, and it’s the same login when dealing with an estate, except then the CRA seems to call it “My Trust Account” in that case. ↩︎
Yeah, sure, don’t include hyperlinks in emails, I know, I know. But is this really the best we can do here? ↩︎
I make extensive use of any digital service offered by the CRA. Telling me about them isn’t necessary. Nor is it necessary to tell me to be nice, I’m always very nice to people on the phone. They are trying to help me and it’s not their fault that they don’t have the tools they need to do their job well. I do wonder whether warnings to “be nice” actually have any effect on the caller who is habitually aggressive or abusive? I really doubt it. ↩︎
Why is it a non-story? Because the “news” is that if you have a massive net worth (715k RRSP, million dollar secondary property), you can expect to pay a massive tax bill when you’re dead. Is this surprising to anyone? ↩︎
Disclaimer: I am neither a tax lawyer nor a tax accountant. Engage the services of a professional if you have doubts.
For most of my working career, I earned more than my spouse did and as a result, paid more income tax, too. Spousal RRSPs are a very easy way to split income down the road1, but what about the here and now? Is there a way to shift income from one spouse to another without a whole lot of complexity2 for THIS year’s tax return?
One thing I set up a few years ago was a spousal loan. The concept is pretty simple:
These funds are used by your spouse for investment in a non-registered account
You charge your spouse interest on that loan, which you must declare as income (and your spouse can deduct as an investment expense)
Your spouse gets to keep capital gains, dividends and interest payments in their name and file them on their return, and thus pay less tax than you would on those gains.
Now, of course, there is the small matter of “what interest rate do you charge”? Since the name of the game is income-splitting it’s advantageous to charge as little as possible. But before you run to the exit and give an interest-free loan, there are prescribed rates set by the CRA, found here. The rate to use is called the “The interest rate used to calculate taxable benefits for employees and shareholders from interest free and low-interest loans” and it currently4 sits at 3%56.
The nice thing about setting up such a loan is that the interest rate is fixed at the time you set it up. I feel pretty smart knowing that my spouse is paying a rock-bottom 1% annual rate and has done so since the 4th quarter of 2020.
So how to go about it? Like all things involving the CRA, it’s good to have records, so
I set up a formal loan agreement dated, signed and archived. It spells out the date the loan was made, the amount, the payment schedule and so on. There’s lots of templates out there.
I transferred the funds to my spouse using a cheque to create a paper trail.
My spouse pays the interest due annually via eTransfer so there’s an email record
I declare the interest as income on my tax return
My spouse declares the interest expense on her tax return
One thing I haven’t figured out yet is when to dissolve this loan. In retirement, I’m not making more than my spouse, so perhaps it’s time to wrap up this arrangement7.
And if you’re careful, you can arrange to have you and your spouse have the SAME amounts in your respective RRSPs when it’s time to convert to a RRIF. ↩︎
I suppose there’s probably some way involving setting up a corporation and paying your spouse a salary, but that concept doesn’t work for everybody ↩︎
Left unsaid, is that you have to have spare cash available to actually loan this money and your spouse needs a way to invest it ↩︎
According to multiple sources this is the interest rate of the 3-month treasury bill sold at auction. Who knew? ↩︎
If I were a betting man, I’d say this rate is likely to go lower before the end of the year. Returns need to exceed the interest rate charged for this to make sense but 3% is a pretty low bar. ↩︎
Or perhaps I’ll just wait until my bonus payouts from Questrade are done. Decreasing my spouse’s holdings will have an adverse effect on the bonus being paid. ↩︎
It’s probably not news to most of you that charitable giving in Canada attracts tax breaks that reduce your tax owing to the CRA. It’s a nice deal — support the causes that are meaningful to you while saving a bit of tax owed.
But for those of you with non-registered accounts holding stocks and ETFs, did you know there’s even a better option that can save you even more tax? By donating shares in-kind to your chosen charity, you get the same donation credit AND you avoid paying capital gains tax on the shares donated!
The differences can be sizeable depending on the unrealized capital gains you have in your portfolio.
Here’s a quick example: let’s say I bought $10,000 of XGRO1 5 years ago in my non-registered account. Per this dividend calculator featured in “Tools I Use” I see that it’s currently2 worth $15,850.
Say I want to donate $1000 to a charity — selling $1000 of XGRO today would generate a capital gain of $369. That’s taxable at 22.48% marginal rate in Ontario in 20253, so I have to pay an additional $83 in taxes4.
If I instead donate the shares in kind to the charity, I pay nothing on the capital gain, and I keep $83 either for me, or for additional charitable works.
So how do you do this? Well, it will depend on the online broker you deal with, but generally the steps are something like:
Let the charity know you’re intending to do this. Larger charities will have a published process, for example the Ottawa Food Bank’s is here5. Smaller charities can still benefit if you use a service like CanadaHelps6.
Let your broker know your intent. Every broker will have a different process, usually including some kind of form. Here’s some examples I found:7
And that’s it. The receiving charity will issue a donation receipt reflecting the market value of the donated securities for your tax filing. The nullification of the capital gain is done using form T11708 when it comes time to file your taxes.
I plan to do this more systematically for the charities I support; it’s admittedly a bit more effort than automated contributions. Since Questrade (my current broker) charges me $25 every time I do this, I’ll have to be a bit more strategic about amounts and timing.
XGRO is a significant part of my portfolio, and as such it is included in my ETF all-stars page. What is also true is that I don’t hold much of it in my non-registered portfolio, but that’s just a historical investing habits showing up. ↩︎
5 year return, WITHOUT dividends reinvested as of July 17, 2025. Not reinvesting the dividends means my cost base is clearly $10k, useful for the example that follows. ↩︎
Per https://www.taxtips.ca/taxrates/on.htm for taxable income between $114k and $150k. Don’t forget that capital gains are only taxed at 50% of the value of the gain. ↩︎
Ignoring the tax savings generated by the charitable donation in the first place since that’s the same in both scenarios. ↩︎
Googling “donate securities” <charity name> is helpful ↩︎
They do keep a portion of the donation to offset their expenses, so it may not be a good idea for small donations. ↩︎
Sorry Scotia iTrade users, I did my best but could not find their form. Let me know if it’s available somewhere and I’ll update. I’ve successfully used the process with both BMO and QTrade. ↩︎
i’m not an accountant. Consult a professional if you have concerns. ↩︎
Global X: “Beyond Borders: Why International Equity is Capturing Attention”
This webinar (registration link) takes place on July 28 at 11:30am EDT. I don’t myself make bets on any particular segment of the market, choosing instead to maintain my geographic splits consistent, including international equity (see my latest report on that). But maybe you don’t have any exposure to international Equity at all; this might be worth checking out in that case.
Global X is the newish name of Horizons, a company I’ve been dealing with for a long time thanks to their innovative swap-based ETFs, namely HXT (Canadian Equity), HXS (US Equity) and HXDM (International Equity)1 . They are useful funds to hold in non-registered accounts because they pay no dividends of any kind; this allows you to defer tax until you need the money and sell them2.
Wealthsimple: Five Costly Retirement Spending Mistakes and How to Avoid Them
I listened to the recording of this webinar, and you can too by registering here. Fair warning: this webinar is at least partly a sales pitch for Wealthsimple’s managed portfolios3, and you can expect a follow-up if you do register.
Sales pitch aside, I thought the presenters did a decent job in explaining the common errors associated with
Asset mix
Getting the asset mix wrong based on your needs. I talk about the concept of asset mix here.
Order of withdrawal (RRIF versus TFSA versus non-registered)
This was something my fee-based financial advisor helped me with. Even a DIY investor can benefit from a bit of oversight as you make the preparations for retirement.
Age to start CPP/OAS
Lots of Canadians take the money as soon as they’re eligible (age 60 for CPP, 65 for OAS) but that’s not always the best choice. I used the CPP calculator to figure out what my best option was.
Underspending
My retirement decumulation strategy is a “drain to zero” approach that allows me to spend (or give away) as much of my wealth as is wise.
Ignoring Estate and Final Tax costs
These can be significant. In the case of my mother’s estate, Final Tax (and not Probate) was the expensive one4. The easiest way to reduce Final Tax is to give away your money while alive.
Full disclosure, I own all three in my non-registered accounts. ↩︎
At which point you will have to pay tax on capital gains, naturally. ↩︎
And although I like and am more than capable of doing a DIY retirement, I need a plan B in the event I lose the capability to do this sort of thing myself. And so I pay attention to service offerings out there. Wealthsimple’s fees seem less onerous so that’s a vote in their favor. I hate fees of all kinds. ↩︎
They would have been horrified at the tax bill and probably would have more aggressively donated their wealth had they known. ↩︎
The Money Engineer 