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All You Need To Know About Calculating The Day Trading Canada Taxes

Managing a good financial portfolio these days is very important. Canadians are pretty eager about this these days and everyone including the young and the elderly is by calculating their day trading Canada taxes. The reason is that people these days are more likely to take matters into their own hands because of online trading technology making things easier for everyone.

How Day Trading is an amazing thing for Canadians?

Consider that you have some security or valuable asset that you have kept for a long time. It may not give you a lot of profit. On the other side, if you sell that thing known as security and make a profit off of it via day trading, you will know the benefit.

In this way the overall capital gain for any of the users is exceptional. However, at the same time, this increased gain calls for day trading Canada taxes calculation which needs some proper formulation for the process.

Best Day Trading Brokers in Canada

Things that matter the most when calculating the day trading Canada taxes.

When you are calculating the day trading Canada taxes there are a lot of different things that are important by different means. Some of the most important ones include:

  • Do you make a living by buying and selling equities using day trading?
  • Are the transactions reported as business income?
  • Are the transactions reported as capital gains?

Well, there are a lot of such things. The important thing to consider is that the process for calculating the day trading Canada taxes will be pretty different for each person depending on the condition.

Moreover, if you do not know how to report things. It will have a huge impact on your taxes. In the worst case, you might have to deal with an audit by the CRA.

Calculating the Day Trading taxes in Canada

The difference between being a day trader and an investor

The first thing that you need to consider is your type. It depends on whether you are an investor or a day trader. The difference here is all about your trading patterns. So, how often do you trade? How Often do you hold the equities? How much time do you spend on trading?

By considering all of this you can know which ones do you belong to when calculating day trading Canada taxes.


If you buy and sell all the equities as investments, then you are an investor. In this case, you must report all sorts of profits and losses on any capital amount.

Business/ Day trader

If your main aim is to make short-term profits and you buy and sell equities on a daily basis. In this case, any income by any means including price fluctuations is reported as business income.

Income and loss for the investor: What you need to know?

When you are going to calculate the day trading Canada taxes. You must know whether you are an investor or a day trader. It is because doing so will have a huge impact on the tax amount that you have to pay.


When you are an investor, you will report your profits as capital gains. It means that you will be having half of the gains taxed at the marginal tax rate. On the other hand, the capital loss is only applicable for reducing or eliminating capital gains.

Additionally, any trading fees are not deductible for the tax amount. While these were some amazing advantages for the investors. There are some major drawbacks for them as well.


The biggest of these drawbacks involves the superficial loss rule that is also known as the 30-day rule. This rule states that if an investor, a company that they own, or their spouse buys a similar asset or buys the same asset back within 30 days after they were selling it.

Then they cannot claim any losses when calculating day trading Canada taxes. This rule alone is responsible for costing huge amounts to investors in annual taxes.

Income and loss for the business: An insight to know about

If you are a day trader then any of your income or loss will be your business income. It will not be your capital gain or loss.


It might be beneficial in some cases but there are some drawbacks as well. For example, you cannot use a 50% capital gain rate on any of your profits. So, 100% of your profits get tax calculation at the current tax rate.

Similarly, 100% of any of your losses are deductible. The best part is that you can also apply this to your other sources of income.


As there are different benefits and drawbacks one of these includes claiming your expenses. Being a day trader, you might be spending some amount for trading. The best part is that if you work as a full-time trader then you can claim all of those expenses related to your trading. The only thing you need here is the receipts.

You need to add those receipts to the tax return and in this way, you can claim the expenses back. An important thing to consider here is that CRA will only be accepting these claims with valid receipts. So, you can get deductions on the following things:

  • Stock market trading course fees
  • Educational resources
  • Purchasing a computer
  • Monthly internet bill for the connection you use for trading.

So, things work out great here. Consider that you have 2 businesses, and you report a loss for one. In this case, you can get tax deductions based on this loss for the business that is going into profit. In this way, you can significantly reduce the tax amount that you have to pay.

Final Verdict

Preparing taxes in the right way is a critical process. If you do everything right, you can save a lot of money. At the same time, one little mistake can make you pay a huge amount in taxes. So, what you need to do is to get proper tax peroration services.

These services include business planning, financial planning, bookkeeping, and a lot of such services. Only in this way you can stay safe when calculating the day trading Canada taxes.