Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
Hello,
I am in a process of opening an account with AMP. What an obligation does a canadian trader has to IRS / US taxes? What are the benefits and risks of trading with US broker versus canadian? My reason going with US broker is that canadian broker wanted me to have extra 10-20% of liquid cash on top of trading account amount.
Thank you.
Alf
Can you help answer these questions from other members on NexusFi?
There is a form on the application called W8 (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding) which you sign during the process. You need to just declare your taxes in country of residence.
Matt Z
Optimus Futures
There is a risk of loss in futures trading. Past performance is not indicative of future results.
Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
1 800 771 6748 local 561 367 8686 email [email protected]
The W8 Ben matt referred to, as he indicated, means you just file your Cdn taxes as per normal - meaning you would declare losses and profits worldwide so US account included.
As to risk, having suffered the USA MF Global taking funds from segregated accounts there are more protections for Canadian accounts provided.
In passing AMP cannot give you an account if you live in BC.
You don't worry about the IRS at all but when it comes to CRA if you trade more than a certain amount (and there is no real definition of what that is) then you need to file a T-2125 "Statement of Business or Professional Activities" with your return due to Subsection 248(1) of the Income Tax Act as it's considered an "Adventure or Concern in the Nature of Trade" (e.g. a business), see CRA bulletin IT-459 and Mittal v The Queen, 2012 TCC 417. It all comes down to which account you put your trading profits or losses to (Income vs. Capital Gains). This is actually an advantage as it is gets taxed at a lower rate if you have a high income and commissions and data feeds become business related costs that make for a deduction. I did have losses one year and was able to carry them forward and apply them to the next years profits also resulting in less tax paid. CRA is only interested in CAD numbers, so you need to know the adjusted costs basis for each and every trade. T-5008s are useless from most brokers (always wrong). If you only make 5 or 6 trades a year then it probably isn't an "Adventure or Concern in the Nature of Trade" but if you trade 1,000 futures contracts in a given year it definitely is.
There are many benefits of dealing with a US broker and Interactive Brokers now handles Canadian RRSP and TFSA accounts. Most Canadian brokers are way behind the times technologically and some still grab as much as 2.5% both ways converting your CAD to USD and then again when you convert it back. I have yet to find a Canadain broker that is as convenient and capable as IB.
so i have a question regarding taxes as well, since I'm also trading from canada.
do you still have to report taxes if you end up losing more than you invested (pretty much if u blew ur account and are no longer able to trade because you don't meed the margin set to trade 1 contract) ?
I believe you can report a loss if you made 50,000 but lost 30,000 from that 50,000 you profited.
but what about if you invested lets say 10,000, you made no profits, but instead you lost your initial investment, and went below the amount required to trade.
- also, lets say during the trading year, you take trades for which u've made some profits, but then over time u lost and gave back any profits, and went below the balance of your initial investment to the point you no longer meet margin requirements. Are the profits you made on those single trades taxable even though overall you have no profit?
