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Paying a FTT on US Futures from Canada?


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Paying a FTT on US Futures from Canada?

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  #1 (permalink)
Brooklyn, NY
 
 
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I recently found out that the President Elect Joe Biden and Vice President Elect Kamala Harris wanted to pass a Financial Transaction Tax on US Trading Instruments. which basically means I have to pay tax on every single trade I put on. So I've been wondering, if this proposal does pass, and that there could be a Financial Transaction Tax in the US, can I move to Canada for example to avoid paying a FTT? I've been doing research and apparently Canadian citizens do not pay taxes to the IRS if they are trading American Instruments like the ES Futures for example, they pay to the CRA. So I was thinking since US Tax Laws do not apply to Canadians, can Canadians still somehow be forced to pay a FTT to either the IRS or the CRA? Any help and replies would be greatly appreciated. I would ask a Canadian CPA or a US CPA but I cant find any. Thank You

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  #2 (permalink)
Legendary Market Wizard
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zed720 View Post
I recently found out that the President Elect Joe Biden and Vice President Elect Kamala Harris wanted to pass a Financial Transaction Tax on US Trading Instruments. which basically means I have to pay tax on every single trade I put on. So I've been wondering, if this proposal does pass, and that there could be a Financial Transaction Tax in the US, can I move to Canada for example to avoid paying a FTT? I've been doing research and apparently Canadian citizens do not pay taxes to the IRS if they are trading American Instruments like the ES Futures for example, they pay to the CRA. So I was thinking since US Tax Laws do not apply to Canadians, can Canadians still somehow be forced to pay a FTT to either the IRS or the CRA? Any help and replies would be greatly appreciated. I would ask a Canadian CPA or a US CPA but I cant find any. Thank You

The US and Canada have a reciprocal tax agreement, in such that you have to pay taxes in one country or the other. Many countries have this type of agreement to facilitate the paying of taxes that relates to where you are a tax domicile. For example, as a Canadian I have submitted the W-8BEN form which exempts me from the 30% US withholding tax and any US taxes for that matter, which essentially means the CRA are now responsible to ensure I paid taxes on earnings even if they were earned in the US.

https://www.angloinfo.com/blogs/global/us-tax/what-is-form-w-8ben-and-what-is-it-used-for/

I guess it depends at what level the FTT is introduced. If it ends up being a fee (much like the CME exchange fee) vs. a tax I would suspect Canadians would be exempt from
paying it, but only to the point of paying it in the US. Would that tax payable be expected to be reciprocated in Canada? I don't know.

I will speak with my accountant about this when more information about how it will be implemented is available.

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I think it will depend on where they apply the tax. If they apply it at the exchange like they do exchange fees then Canadians will have to pay it.

If is up to the client or it is taxed at the broker then possibly Canadians will be exempt.

I'm guessing it would be applied at the exchange just to make keeping track of it easier.

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Hi @zed720,

I am moving this post from the "Emini and Emicro Index" sub-forum to the more general "Traders Hideout" section, because it is of general interest beyond emini and emicro trading.

Also, you made a duplicate entry of this post in the "Articles" section, which is a natural mistake, but that area is reserved for reference type articles and wiki articles, not regular posts that are meant as part of a discussion. I have deleted that "article" post. Thanks for posting in the regular part of the forum instead, where it can be replied to.

No doubt there will be more on the topic in times to come.

Bob.

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Legendary Market Wizard
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I'm curious as Canadians do you pay the 2c NFA fee on every trade?

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SMCJB View Post
I'm curious as Canadians do you pay the 2c NFA fee on every trade?

We certainly do pay a fee, but I don't know if it is only 2c per contract per round turn or single turn. I'll have to do some digging, but yes we do pay an NFA fee.


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Then as @deaddog said, I expect this would be assessed at the exchange level and that it would effect trades regardless of domicile of the trader.

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SMCJB View Post
Then as @deaddog said, I expect this would be assessed at the exchange level and that it would effect trades regardless of domicile of the trader.

Ah right...yes. Never thought of that. Thanks for the info!

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Legendary Market Wizard
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I also think that if if there is a fee for futures that it will be something small and nominal like the NFA fee. Anything bigger would literally kill the markets.

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