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Canadian Tax Regs Day Trading Index Futures


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Canadian Tax Regs Day Trading Index Futures

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CharlieDeltaTango
Comox BC/Canada
 
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Any Canadians out here intra-day trading index futures in the frequency of 2-20 trades per day? (ES, NQ, YM). I have already searched the site and found some discussions on this already, but without the qualification of exploring short term trading wherein the scrutiny of tax code would become more clear (I would think). I am looking for actual tax filing experiences here - not hypothesis'.

Curious to learn if other Canadian traders; when executing a high number of trades per day with no other income (salary or otherwise);

a) If they are filing as an individual if they are reporting as capital gains or income?
a1) In either scenario what was the result of the assessment by the CRA?
b2) If they managed to have the CRA allow them to be taxed under the capital gains umbrella and they are subsequently experienced improved yearly P/L (ie. $250K+ per year) has the CRA attempted to rescind that judgement and forced them to file as income instead?

b) If they file within a corporation are they able to report trading profit as income? (beneficial if making less than $500K per annum as it would fall under small business exemptions) or is the corporation subject to having to file as capital gains? (which unlike personal capital gains, under corporate tax code, the capital gains structure is more punitive)

I have read all sorts of claims that futures are always taxed at the capital gains rate for individuals, but I strongly suspect that an intra-day trader (2-20 trades per day) with no other income would almost certainly be taxed as income. But perhaps I am wrong. I am leaning towards rolling all my trading activity into a corporation, but would like to hear what others are experiencing in that structure before I do. Please, any Canadians out there chime in with personal experience.

Thanks Guys - 1st post here - hoping for some meaningful feedback - tax interpretation is a difficult beast and actual REAL reports are worth a heck of a lot!

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 Blue Eagle 
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CharlieDeltaTango View Post
Any Canadians out here intra-day trading index futures in the frequency of 2-20 trades per day? (ES, NQ, YM). I have already searched the site and found some discussions on this already, but without the qualification of exploring short term trading wherein the scrutiny of tax code would become more clear (I would think). I am looking for actual tax filing experiences here - not hypothesis'.

Curious to learn if other Canadian traders; when executing a high number of trades per day with no other income (salary or otherwise);

a) If they are filing as an individual if they are reporting as capital gains or income?
a1) In either scenario what was the result of the assessment by the CRA?
b2) If they managed to have the CRA allow them to be taxed under the capital gains umbrella and they are subsequently experienced improved yearly P/L (ie. $250K+ per year) has the CRA attempted to rescind that judgement and forced them to file as income instead?

b) If they file within a corporation are they able to report trading profit as income? (beneficial if making less than $500K per annum as it would fall under small business exemptions) or is the corporation subject to having to file as capital gains? (which unlike personal capital gains, under corporate tax code, the capital gains structure is more punitive)

I have read all sorts of claims that futures are always taxed at the capital gains rate for individuals, but I strongly suspect that an intra-day trader (2-20 trades per day) with no other income would almost certainly be taxed as income. But perhaps I am wrong. I am leaning towards rolling all my trading activity into a corporation, but would like to hear what others are experiencing in that structure before I do. Please, any Canadians out there chime in with personal experience.

Thanks Guys - 1st post here - hoping for some meaningful feedback - tax interpretation is a difficult beast and actual REAL reports are worth a heck of a lot!

Wow, solid support by the Canadian contingency... Not sure if you are around anymore @CharlieDeltaTango but I was planning on starting a thread with the same question. Anyone know best practices, that have been accepted by the CRA, for futures trading in Canada. I have a good accountant for my own business and she doesn't sound 100% sure about futures "day trading". Investing she knows about but futures she tells me I need to track each and every trade, entry and exit price and then do the math on exchange to record and report in Canadian dollars. Doesn't take much volume before I'd be spending more time doing paperwork than trading.
Anyone been making money in Canada that would share a little wisdom?
thanks, Craig

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