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[OP]
Newbie
Aug 22, 2006
89 posts
41 upvotes
Ajax

How to trade from a business

Looking for some guide on how to do stock trading as a business and claim income as business income.

I guess capital gain tax for business is 25% ... please let me know if I am wrong...
3 replies
Deal Addict
Oct 28, 2015
1916 posts
1080 upvotes
Vaughan, ON
You need a good accountant, from what I remember, you should sometime actively buy & sell the same stock despite your true intention was not selling/buying at all in order to make the profile * business active*, and leave the rest to your accountant.
Deal Addict
User avatar
Jan 19, 2007
1316 posts
667 upvotes
Torontario
thirupiran wrote: Looking for some guide on how to do stock trading as a business and claim income as business income.

I guess capital gain tax for business is 25% ... please let me know if I am wrong...
I think first of all, you might consider incorporating - then all income is "business income" and any swings in both directions shelter your household and other assets.
I am not sure that any top-tier discount brokers want to deal with sole props anyways as non-personal accounts
Member
Jan 18, 2017
361 posts
274 upvotes
So there's two things to watch:

1. You don't get "capital gains" tax rates if you're claiming the trading as "active business income." You're trying to have it both ways: Capital gains for trading profits, but a fully-deductable business loss for the trading losses. That won't fly with CRA.

2. If you incorporate the business, you need to employ at least five full-time staff in order to qualify your investment business as an "active" business, and as such qualify for the corporate business tax rates. Otherwise you're looking at the usual Refundable Tax regime applied to investment income.

Hopefully that helps a bit.
thirupiran wrote: Looking for some guide on how to do stock trading as a business and claim income as business income.

I guess capital gain tax for business is 25% ... please let me know if I am wrong...
______
Canadian & US tax guy (CPA)

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