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Futures trading (or any day trading that is your primary business) is treated as an income activity by CRA, so capital gains and superficial rule do not apply.
The following user says Thank You to Snoop for this post:
Snoop, even if I have not registered a business or a LLC and have a full time job, I will have to report my futures day trading as a regular business income? So my total losses for the year would be shown then I assume?
I'am still obviously going to talk to my accountant next year around time for filing, but just trying to learn a little on my own before hand, thanks.
I recently asked the CRA and the agent said it would be fine to report my losses as a capital loss? He also said its ok to ignore the superficial loss rule as long as all my losses are not just bunched up near the year end which he said a lot of traders do.
Should I go with this information as being correct? First year trader so I am still puzzled on which method to go with.
I took the gentlemans name from the CRA, but I plan to call them up again next year sometime in January to ask one more time to be on the safe side. If I get the same response I will go ahead and use the capital loss, if I get a different answer I am going to have to go into the CRA office I think and talk to them in person about this to make sure I get the correct answer.
I do not have a separate business set up to trade in. I trade in a joint account and only trade futures. I get a single 1099 at the end of the year from my broker. This 1099 simplifies things considerably and as such is a single taxable event regardless how many trades I place during the year. I am taxed on the amount of profit/loss reported on that 1099 and that's it. Very simple.
My plan for the near future is to trade from a Roth account. When I turn 59 1/2, I will be able to withdraw from my Roth account without penalty. By definition as I understand the tax laws is that proceeds from a Roth account are not taxable. Only contributions made to the Roth account are taxable at the time of the contribution. So, being as I will be trading from an existing Roth account, any money made trading futures will not be taxed when I withdraw the money. Further, because I don't any other form of income from a "real" job, proceeds from my Roth account will not effect my ability to draw social security.
Anyone with experience or knowledge contrary to what I've outlined is very welcome to comment.
The following 3 users say Thank You to MWinfrey for this post:
Assuming you are in USA you would pay 60% of profits at the long-term capital gains tax rate and 40% at the ordinary income tax rate for futures trades.
This is a very interesting concept that I am looking into as well. Huge tax savings potential. I'm wondering how many traders here use this method for tax reasons? Also, for those who use it, do you use an automated strategy in it as well? Thanks!
