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2:32 Is day trading income business income or capital gains?
3:50 CRA definition of day trading
8:46 Pros & Cons to filing as capital gains vs business income
12:49 Day trading in TFSA
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How to file day trading taxes in Canada? Is day trading in TFSA account allowed? Is day trading income considered capital gains or business or self employment income?
While capital gains are 50% taxable, self employment & business income are 100% taxable.
But you must file your trading income according to CRA rules and definitions:
1. How often do you trade?
2. How long you hold the trading positions for?
3. How much time you spend on trading and market research?
4. How substantial is the trading income?
Day trading in TFSA account. Is that allowed?
The short answer is NO. If your trading activity is considered business income according to the 4 definitions above. Tax free savings account is meant for long term savings and investing.
Some casual swing trading with options or stocks are allowed in TFSA. But talk to a tax professional first regarding your own situation.
The Canadian Revenue Agency will have access to all your trading transactions on form T5008. Please make sure to consult a CPA regarding your day trading taxes.
Resources referenced on Day Trading Tax Canada:
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