hi. i have another question. i f revenue canada says its a business.the do you have to pay taxes on a monthly basis?
Anyone know a accountant that specializes in Canadian/US issues, specifically operating a Canadian business and paying US employees?
Steeldust, are you short selling and claiming the profits as capital gains? Revenue Canada documentation states that these trades are considered income. "18. The gain or loss on the "short sale" of shares is considered to be on income account." http://www.ccra-adrc.gc.ca/E/pub/tp/it479r/it479r-e.html
wow! I didn't know that! A very wacky tax code if there ever was one. 18. The gain or loss on the "short sale" of shares is considered to be on income account. Why do you think that is? To discourage short selling? Are you sure that is the most recent interpretation (published in 1984) regarding this matter?
That's the latest info as far as I can find. Yes, '84 seems outdated as it was written before the average retail guy was shorting and trading in mass since the online trading explosion. You can imagine how difficult reporting taxes could be whereby you claim capital gains on the longs and income on the shorts... with the tax rate ~double on the shorts. I don't know if you can claim both capital gains and business income at the same time on your trades. I believe Revenue Canada wants you to state one approach or the other and once declared, all future trades will be treated in the same way. Clearly, the advantage in Canada is to claim capital gains, if you are doing this as a parttime venture with a dayjob. It would be hard to make up the difference with deductions in an income treatment. This is why I am curious whether steeldust is actively shorting. We need a Canadian accountant who trades on this thread...
Keep in mind one advantage of declaring your trading as income if you still have a regular job. If your trading results in a loss, you can deduct all of it, plus all your expenses, against your salaried income. This could net a pretty big tax return for the people in this situation. Capital losses can only be offset by capital gains.
Thanks for the link. As a Canadian trading with a US prop firm earning partnership income, I will have to file a US return. Has anyone used this outfit, and how were they? Any Canadians had to file a US return dealing with partnership income, did you have to pay much, and was it recoverable through a tax-treaty agreement? Thanks, Corey
I've used them and found them very helpful. I'm not sure if they will be able to help you but it wouldn't hurt to send them an email.