Should I decide to sell and take the loss, I would repurchase a similar security (sell VGRO and buy XGRO). My understanding is that because these track different indices, it’s kosher with CRA.

My question is related to the tax loss. Is it calculated with CRA separately for my wife and I or is it combined?

—Andrew

Reporting capital losses as spouses with joint accounts

One thing you will have to consider, Andrew, is if the two joint non-registered accounts are actually joint accounts or if one belongs to you and one to your wife. Sometimes, spouses will have separate accounts for tax purposes, and they make them joint accounts in name only for administrative and estate planning purposes.

The reason for this is the distinction between legal and beneficial ownership. Legal ownership is whose name is on an account or asset. Beneficial ownership is who technically owns it. If you have a joint account that is funded by only one spouse’s earnings, the account could be joint legally, but beneficially only belong to the contributor spouse for tax purposes.

Some spouses will identify whose account it is by whose name is listed first. For example, Andrew and Andrea’s account would be Andrew’s for tax purposes, and Andrea and Andrew’s account would be Andrea’s.

When an account is legally joint, either spouse can access and trade on the account, and if one of the spouses dies, it passes directly to the survivor. So, administratively, joint ownership has benefits, but you can and should report the income based on the respective contributions of the spouses.

If one account is beneficially yours and one account is beneficially your wife’s, Andrew, any losses triggered should be reported by the spouse who realizes the capital loss. And if the joint accounts are split 50/50, you and your wife should report any losses as 50/50. A common mistake is thinking you can choose whose tax return to move the losses to, but it does not work that way.

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