Capital Gain Question
I have a few ETF's in an un-registered cash account. I'm going to sell them and put the money into my RRSP. The sale will be for a small capital loss. While I owned the ETF's, I had dividend income and interest income from a money market fund. Can I use the capital loss from the sale of the ETF's to offset the gain from the dividends & interest?...or can you only use the capital loss to offset capital gains?
No, capital loss goes agaist capital gain and you should manage the tax transactions at the end of the tax year, however the brokrage firm will send you the t5 or t3 so you can report the dividend income or return of capital.
+1 that Capital Losses (CL) can used to offset Capital Gains (CG). Bear in mind that if you have other investments sold for a CG, you can use the ETF CL to offset them. The CL can be carried back tax three years or used going forward.
To explain a bit on the Return of Capital (RoC), the question is whether the ETF you are considering selling has paid RoC as part of their distributions, while you owned it. If so, the RoC part of the payment is used to reduce the cost paid (referred to as Adjusted Cost Base) and will affect the CL or CG to report on your tax return.
Here is a web link:
You may also want to check out the CMF section "Taxation" and have a look at the sticky "How Investment Taxes Work".
Also remember that bonds can also generate both a CG or a CL. When I did MILs taxes, I was amazed at how much CL she had from her former portfolio manager.