https://www.taxtips.ca/filing/capital-losses.htm#:~:text=Capital%20losses%20can%20also%20be,the%20inclusion%20rate%20is%2050%25.
Capital Losses
Income Tax Act s. 3(b), 111(1)(b), 111(2)
Capital losses can normally only be used to reduce or eliminate capital gains. They cannot be used to reduce other income. If you have capital losses that exceed capital gains in the current year, you can (but don't have to) carry back the losses to any of the 3 preceding taxation years to be deducted against capital gains in those years. Capital losses can also be carried forward indefinitely. The only time they can be used to reduce other income is in the year of a taxpayer's death, or the immediately preceding year. At this time, 1/2 (50%) of the capital loss would be used to reduce other income, when the inclusion rate is 50%. For more on this topic, see the Canada Revenue Agency (CRA) interpretation bulletin IT232R3 - Losses - Their Deductibility in the Loss Year or Other Years (Archived) paragraph 30.
A loss on shares or debt may be considered a business investment loss instead of a capital loss, in certain circumstances. See our link below to the article on business investment losses.
Some capital losses may be considered superficial losses, and disallowed. Also, losses on transfers of shares to an RRSP, TFSA, DPSP or RDSP are not deductible.