For Canadian and U.S. equities, the settlement date is 2 business days after the trade date.\u00a0 For example, if a trade is placed on Tuesday, December 4th, 2018 (the trade date), the settlement date would be 2 business days later: Thursday, December 6th, 2018:<\/p>\n
Holidays when the stock markets are closed do not count as business days.<\/p>\n For other kinds of investments, including foreign equities, options, mutual funds, money market funds, bonds, commodities, and GIC’s, the gap between the trade and settlement dates can vary (the settlement date is usually between 0 and 3 days following the trade date).\u00a0 The settlement date should be provided by your bank or brokerage on your trade confirmation notice (or a similar document) so it’s always best to check there.<\/p>\n Note: the settlement date for most securities in North America changed to T + 2 as of September 5, 2017<\/a>.\u00a0 Prior to this date, the settlement for most North American securities was T + 3 (a trade settled 3 days following the trade date).<\/p><\/blockquote>\n Why Is the Settlement Date Important?<\/span><\/strong><\/p>\n When selling a security towards the end of December, it’s possible for the transaction to settle in the next year.\u00a0 This means that any capital gain or loss incurred may apply to the next year even if the trade occurs in the current year.\u00a0 Deferring a sale into the next year can be advantageous in the case where a capital gain occurs, or disadvantageous for a sale involving a capital loss.\u00a0 In any case, the capital gain or loss must be reported in the correct year.<\/p>\n Determining the final date on which stock trades can occur and settle before the end of the year can be tricky.\u00a0 Markets in Canada are closed on Christmas Day and Boxing Day, so these days do not count for the 2-day period between the trade and settlement dates (see the TSX holiday calendar<\/a>).\u00a0 Also, holiday schedules can be different between the U.S. and Canada as Boxing Day isn’t a holiday in the U.S.<\/p>\n For 2018<\/strong>, for Canadian<\/strong> equities, the last trading date resulting in settlement in 2018 was Thursday, December 27th, 2018<\/strong> (December 25th and 26th were holidays).\u00a0 Any trade placed on Thursday, December 27th would settle on Monday, December 31st.\u00a0 Any trade placed after this date would settle in 2019.<\/p>\n For 2018<\/strong>, for U.S.<\/strong> equities, the last trading date resulting in settlement in 2018 was Thursday, December 27th, 2018<\/strong> (only December 25th is a holiday since Boxing day isn’t observed in the U.S.).\u00a0 Any trade placed on Thursday, December 27th, 2018 would settle on Monday, December 31st, 2018.\u00a0 Any trade placed after this date would settle in 2019.<\/p>\n For 2019<\/strong>, for Canadian<\/strong> equities, the last trading date resulting in settlement in 2019 will be Thursday, December 27th, 2019<\/strong>.<\/p>\n For 2019<\/strong>, for U.S.<\/strong> equities, the last trading date resulting in settlement in 2019 will be Thursday, December 27th, 2019<\/strong>.<\/p>\n For 2020<\/strong>, for Canadian<\/strong> equities, the last trading date resulting in settlement in 2020 will be Tuesday, December 29th, 2020<\/strong>.<\/p>\n For 2020<\/strong>, for U.S.<\/strong> equities, the last trading date resulting in settlement in 2020 will be Tuesday, December 29th, 2020<\/strong>.<\/p>\n The Settlement Date and Collecting Dividends<\/strong><\/span><\/p>\n In order to collect a dividend, the shares must be owned on the record date.\u00a0 Note that the record date is distinct from the payment date.\u00a0 Typically the record date can be between a few days and a month before the payment date.<\/p>\n Another related date is the ex-dividend date, which occurs 1 business day before the record date.\u00a0 The ex-dividend date can be used to determine whether you’ll receive a dividend by comparing it to the trade date.\u00a0 If you purchase shares before the ex-dividend date, you’ll receive the dividend.\u00a0 On the other hand, if you purchase shares on or after the ex-dividend date, you won’t receive that dividend.\u00a0 Similarly, if you sell shares before the ex-dividend date, you won’t receive the dividend.<\/p>\n The Settlement Date on AdjustedCostBase.ca<\/strong><\/span><\/p>\n When using AdjustedCostBase.ca<\/a> to track your adjusted cost base and capital gains<\/a>, your transactions should always use the settlement date for buy and sell transactions.\u00a0 This ensures that capital gains and losses will appear in the correct years.<\/p>\n Also, any transactions involving distributions for ETF’s \/ funds \/ trusts (such as Return of Capital, Capital Gains Dividends, and Reinvested Capital Gains Distributions) should use the record date that applies for the distribution.\u00a0 Again, this ensures that any applicable capital gains and losses are reported for the correct year.\u00a0 Even more importantly, when using per share amounts for a distribution, using the record date is necessary to ensure that the distribution is applied to the correct number of shares.<\/p>\n We can illustrate this with an example.\u00a0 Suppose you purchased 400 units of VVV on the Toronto Stock Exchange for $100\/unit traded on Thursday, January 3rd, 2019, with a commission of $10.\u00a0 Then trading on Monday, December 30th, 2019, you sell all 400 units for $80\/unit with a commission of $10.<\/p>\n Before entering the transactions into AdjustedCostBase.ca, the trade dates should be converted into settlement dates.\u00a0 Since the settlement date for Canadian equities occurs 2 business days after the trade date, the transaction details are as follows:<\/p>\n The sale transaction’s settlement date occurs 3 days after the trade date because January 1st is a holiday.\u00a0 After entering these transactions into AdjustedCostBase.ca you should see the following:<\/p>\n Since the settlement date of the sell transaction is in 2020, the capital loss cannot be claimed for 2019 (even though the trade happened in 2019).<\/p>\n As explained above, another situation where special attention needs to be paid is when distributions occur around the same time as a purchase or sale.\u00a0 Let’s look at the following example:<\/p>\n The trade date needs to be converted into a settlement date.\u00a0 In this particular case, the settlement date is Tuesday, December 31st, 2019 (2 business days later).\u00a0 These transactions appear on AdjustedCostBase.ca as follows:<\/p>\n![\"\"](\"https:\/\/www.adjustedcostbase.ca\/blog\/wp-content\/uploads\/trade_date_settlement_date.png\")
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