How to Leverage Canadian Telecom Losses to Reduce Your Tax Burden

Investors holding Canadian telecom stocks like BCE and TELUS in non-registered accounts are facing persistent share price weakness. Over multiple years these blue-chip communications names have struggled, with dividends under pressure and returns lagging broader markets. While it’s frustrating to sit on unrealized losses, there is a pragmatic tax strategy that can convert these losses into meaningful savings: tax-loss harvesting.

What Tax-Loss Harvesting Actually Means

Tax-loss harvesting is the deliberate sale of a security at a loss within a non-registered investment account to realize a capital loss. Realized capital losses can be applied against capital gains you have realized in the same tax year. If your losses exceed your gains, you can carry those losses back up to three years to claim tax refunds for prior gains, or carry them forward indefinitely to shelter future profits. This flexibility allows investors to reduce their overall tax burden by offsetting taxable gains with allowable losses.

Rules to Navigate

There’s a critical rule to observe: the superficial loss rule. This means that if you sell a stock at a loss and then buy the same or a “substantially identical” security within a 30-day window before or after the sale, the loss will not be recognized for tax purposes. That negates the point of the exercise. As a result, it’s essential to avoid repurchasing identical shares too quickly or using products that the tax authority could view as substantially the same.

Also Read: Best long term Canadian stocks

What You Can Do Instead

Rather than repurchasing the same telecom stock, consider investing the proceeds in a broadly diversified income-oriented exchange-traded fund. A utility and infrastructure-focused ETF can offer exposure to high-yield sectors, maintain income generation, and reduce concentration risk. This lets you stay invested in a similar space without violating the superficial loss rule.

Also Read: Long term investing in Canada

Bottom Line

Rather than letting your telecom holdings languish in the red, recognize the loss strategically. By crystallizing losses in non-registered accounts and redeploying capital into diversified alternatives, you can improve your tax position and maintain exposure to income-producing assets without breaching tax rules. Always consider consulting a tax professional to tailor this approach to your specific situation.