Q: My question relates to tax loss selling.
I sold two stocks prior to year end for a capital loss. However, the dividend payout after the sale date were automatically reinvested into the same two stocks. I called the discount broker a couple of days after this and had them sell the shares.
Do the reinvestment shares nullify the ability to claim the tax loss for the 2023 tax year?
Thanks for your assistance in advance.
I sold two stocks prior to year end for a capital loss. However, the dividend payout after the sale date were automatically reinvested into the same two stocks. I called the discount broker a couple of days after this and had them sell the shares.
Do the reinvestment shares nullify the ability to claim the tax loss for the 2023 tax year?
Thanks for your assistance in advance.
5i Research Answer:
Keep in mind we are not tax experts but based on what we know and have seen, DRIP dividends are taxed as dividends and not share purchases, so there should be no superficial loss rule here. The dividend amount is taxable, and the amount can be added to the ACB of the shares sold.