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🍁 CA & 🇺🇸 US · TraderTaxIQ
TraderTaxIQ
Classify your trade, understand day trading taxes, and know your rights — in plain English.
⚠ For educational purposes only. Not financial or tax advice.
180
days
≈ 6 months
⏳ 185 more days until long-term (US: needs 366 days)
How Day Trading Income is Taxed
Canada
▼
In Canada, the CRA does not have a legal definition of “day trader” — but it does distinguish between investors and people who trade like a business. If the CRA concludes you are trading as a business, 100% of your profits are taxable as business income at your full marginal rate — not as capital gains (which would only be 50% taxable).
If classified as investor
50% of gains taxable (Capital Gain)
If classified as business trader
100% of gains taxable (Business Income)
Tax rate
Your full marginal rate
Reported on
T2125 — Business Income
⚠️ The silver lining: Business income classification isn’t all bad. You can deduct trading-related expenses — such as data subscriptions, platform fees, a dedicated home office, and education costs — against your income. Investors cannot do this.
📌 How the CRA decides: The CRA looks at frequency of trading, the period of ownership, your knowledge of markets, the time you devote to trading, and whether trading is your primary source of income. No single factor is decisive — it’s the full picture.
Wash Sale Rule
Canada
▼
Canada does not have a formal “wash sale” rule like the US. However, the CRA has a related concept called the “superficial loss” rule. If you sell an investment at a loss and you — or an “affiliated person” like your spouse — buys the same or identical investment within 30 days before or after the sale, your capital loss is denied.
Rule name
Superficial Loss Rule
Window
30 days before or after sale
Effect
Capital loss is denied
Applies to
You, spouse, or corporation you control
💡 The denied loss is not permanently lost — it gets added to the cost base of the repurchased shares. You effectively get the loss when you eventually sell the shares for good.
⚠️ Crypto note: The CRA has not officially confirmed whether superficial loss rules apply to cryptocurrency, but many tax professionals advise treating crypto with the same caution.
Record-Keeping for Active Traders
Canada
▼
Whether you’re classified as an investor or a business trader, the CRA requires you to keep detailed records of all trades. Good records can also protect you in an audit.
1
Date of each transaction — both purchase and sale date
2
Number of shares / units and the name of the security
3
Cost in Canadian dollars — including commissions paid
4
Proceeds of sale in Canadian dollars
5
Keep records for 6 years — the CRA can audit up to 6 years back
💡 If you trade foreign securities, all amounts must be converted to Canadian dollars using the exchange rate on the date of each transaction.