Futures trading federal taxes canada

Financial Wisdom Forum Where Canadian Investors Meet for Financial Education and Empowerment Skip to content. Tax implications of futures trading Income tax policy, rules, problems, strategy and software. Property and consumption taxes too. The above-mentioned article seems to be the closest similar rule for Canadians. A few practical questions come to mind: E-mini ES fall under commodity futures speculation in ITR?

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And, on a somewhat different note: It clearly shows how much interest CRA has in futures trading. There are very few successful private traders in Canada and they are not on CRA's priority list, at least for now. It doesn't matter if you trade ES, CL, GC or YM.

They are all treated as "futures". CRA even has a code number for that. You can see it on T from Interactive Brokers, there are separate boxes and codes for stocks, options and futures. It seems that CRA assumes that most people who try trading full time will fail and lose money. If taxpayers reported those losses on income account they would be eligible for "business loss" refund.

In order to avoid issuing those refunds CRA doesn't object to taxpayers reporting everything on capital account. The important thing to remember is that you need to be consistent. For instance, Interactive Brokers Canada uses daily currency conversion. In this case you need to remember that if you hold a futures position overnight, you will need to apply the same exchange rate to both buy and sell transactions regardless of the trade date.

Otherwise your numbers may be way off compared to your broker's numbers because of exchange rate difference multiplied by futures leverage ratio. The last time I looked into it IB seemed to use the exchange rate of the day the position was opened.

This is what Interactive Brokers reports on their T The file transmitted to CRA by a tax software apparently only contains the totals as well see another thread about it.

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Of course you need to keep the full documentation with all trades at home, just in case. To deduct those expenses you would need to report on "income" account. Please wait for someone else to confirm this, I might be wrong here. I'm only aware of differences between provinces as far as eligibility to trade some instruments is concerned.

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For instance to trade forex in Alberta you must qualify as "accredited investor". Just scroll back the list and look for threads about Interactive Brokers, futures, forex, etc. It has been the standard practice for years: These are "business expenses" that you would deduct if reporting on income account. Newguy's tip about deducting broker's monthly fees looks interesting. Just to clarify things for the OP.

IRS is a completely different beast than CRA. In Canada we don't have all those rules specifically targeting short term traders like they have in the US. Many tax guidelines are quite old, there are lots of grey areas, some details are left to interpretation and good will. The key is to be consistent in your reporting, understand your interpretation of the rules and have all the documents at hand in case CRA requests more information. Based on article ITR Commodity Futures and Certain Commodities http: I had no idea about the "accredited investor" bit for trading forex in Alberta.

For reporting, I would think that having a US broker i. Of course, that would introduce more currency risk. Are there any points to keep in mind from a Canadian perspective when choosing a futures broker? However, it is because of those rules for securities traders that I posted these questions in the first place. Last edited by Kirkx on 01 Apr It seems you are quite knowledgeable in this area Could you recommend a broker for selling options on futures for Canadians?

I am with IB now. Their commissions and executions are great, but margin is not so great. And for GC it's even higher.

OptionXpress is just too expensive. Another option would be US-based broker, but not many of them allow to sell options on futures and work with Canadians at the same time. Thanks for sharing, Kirkx. Considering the PFGBest and MFGlobal incidents, a broker with CIPF membership offers more peace of mind.

It's unfortunate that choosing brokers is like walking a minefield. How does RJO'Brien rank on those points?

Also, no reduced intra-day margin. Could they make it any less attractive?

I would suggest to open a new thread titled "Futures Brokers For Canadians" in Discount Brokers section of the forums: Just started new thread for option broker suggestions viewtopic. It seems IB is the most viable option in Canada. Why don't you want to go with them, fizikz? We are getting off topic here, this thread is about taxes.

Regarding taxes, how would the inevitable change in CAD vs USD be treated when repatriating cash from a US broker account? The gain or loss due to currency while you're in a position is reported as part of the position profit as it gets converted to Canadian dollars.

I don't know anyone who does this. If it doesn't agree with experiment, it's wrong. Feynman, Nobel prize winner]. Sorry to labour the point; I am new at this. If you buy a US listed stock and you have no USD then you will be borrowing US dollars like he said. You can also convert money into USD or a bunch of other currencies using IDEALPRO and then you actually have that currency in you account.

Filing Taxes on Futures Trading

That's one way of doing it, but not the only one and IMO not the most common one. This was the way IB set my account by default, and I never asked them to change it, so I am simply ignorant about other possible ways. Not really, you're talking about two different things It's part of the futures trade and gets reported in the proceeds of disposition - they're all reported converted to CAD, by you and the broker.

The profit is just what they're worth now in CAD minus what they were worth in CAD when you bought them. All posts 1 day 7 days 2 weeks 1 month 3 months 6 months 1 year Sort by: Author Post time Subject Direction: Who is online Users browsing this forum: Bing [Bot] and 1 guest. Board index All times are UTC