Canadina Tax Laws

Discussion in 'Taxes and Accounting' started by juve, Dec 19, 2008.

  1. juve


    I know there have been threads started talking about this but there seems to be a 50/50 conclusion on the question.

    Okay I trade the S&P Futures anywhere from 1-10 trades a day. Now we have Capital Gains Tax and regular tax. I know if you are Daytrading STOCKS for your primary source of income you have to pay regular income tax on that and capital gais tax rules don't apply.

    In regards to futures I saw this on Revenue Canada's WebSite:

    6. In this bulletin, a "speculator" is a taxpayer who takes one or more futures positions or acquires a commodity other than in the circumstances described in 3, 4 and 5 above.

    7. As a general rule, it is acceptable for speculators to report all their gains and losses from transactions in commodity futures or in commodities as capital gains and losses with the result that only one- half the gain is taxable, and one-half the loss is allowable subject to certain restrictions, (hereinafter called "capital treatment") provided such reporting is followed consistently from year to year.*

    8. If a speculator prefers to use the income treatment in reporting gains and losses in commodity futures or commodities, it may be done provided this reporting practice is followed consistently from year to year. If income treatment has been used by a speculator in 1976 or a subsequent taxation year, the Department will not permit a change in the basis of reporting. *Interpretation Bulletin CPP-3 discusses the effect of the income treatment and capital treatment on self-employed earnings for the purposes of the Canada Pension Plan.

    9. It is possible that a taxpayer described in 3 or 4 above, in addition to the transactions described therein to which income treatment is applicable, may have other transactions in respect of which that taxpayer may be treated as a speculator. For example, in the circumstances outlined below, the Department will accept the contention that the taxpayer should be treated as a speculator (and the comments in 7 and 8 above apply) with respect to the following transactions:

    (a) Commodity or futures trading in a commodity not connected with the taxpayer's business. For example, a wheat farmer who does not grow corn may report gains or losses with respect to any transaction in corn futures as a speculator.

    (b) Commodity or futures trading by a taxpayer described in 4 above in a commodity in respect of which the taxpayer has no special information.

    10. As a general rule, a taxpayer who takes commodity futures positions in, or who has transactions in, a commodity connected with a business, is considered to be trading as part of the business operations and the comments in 3 above apply. However, there may also be some cases where a taxpayer who produces or uses a commodity in a particular business operation has transactions in that commodity or in futures of that commodity that are, in fact, not part of that particular operation. Whether or not a transaction would fall within this category depends on the facts in each case. As an example, a jeweller who buys 100 ounces of gold for a business (a normal amount for that business) and also makes additional purchases of 1600 ounces of gold, or of futures contracts representing 1600 ounces of gold, as a speculation for his or her own account, may be viewed as a speculator with respect to the additional purchases when all the facts of the situation are considered.

    reading through this it leads me to think that you can qualify your speculation"day trades" in the futures markets as capital gains.

    1)Is there anyone in here that makes aliving trading futures in Canada that can clarify this for me.

    2) Does anyone know of a CA,CMA,CGA or firm in Toronto, Ontario, that is a specialist in doing taxes for day traders.

    Thank You
  2. try doing a google search with Toronto + your search terms. I am sure a website + an ad or two will pop up