TOMMY1 wrote: TT - Just been talking to CRA for a good part of 30 minutes as they were not so familiar with the IT-459 if you can believe it. I was referred to a more senior agent who did a good job of explaining it as well as eligibility.
Basically, the IT-459 only applies to those who report their income on business basis so the capital gains / losses rules do not apply.
If you report your income based on a capital basis, then the superficial loss rules do apply. If you sell a stock at a loss, in order to claim this as a capital loss, you must not rebuy the stock within 30 days. To report capital loss, you must sell ALL of your stock and must not rebuy within 30 days. This rule apples to INVESTORS (passive income) and not DAY TRADERS (main income).
Before you proceed you have to ask yourself whether you are taxed on basis of capital or income.
Day trader = business income (so IT-459 applies)
Investor = capital gains / losses rules apply (so superficial losses need to be considered)
As I am an investor (not a day trader), and this is not my main source of income, then the superficial losses apply to me as I declare income from my investments as capital losses / gains (and so need to be aware of superficial losses).
Appreciate you drawing this to my attention and I hope the above helps some others on this board as some may also need to be aware of superficial losses as not all fall into the category of 'day traders".
TickerTwit wrote: IT-459 is old (1980) but seems to be the most informative document the CRA offers at the moment. Some accounting firms publish additional info, such as case law examples where investors have challenged the CRA after being declared 'traders' (or conversely, wanting to be 'traders', but being declared 'investors'). Good that you have an accountant for a qualified opinion.
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TOMMY1 wrote: Thanks TT - good to know and I will have to put this by my accountant to see if my trades are eligible. I found some archived information on the CRA website but nothing current:
https://www.cra-arc.gc.ca/E/pub/tp/it459/it459-e.html Thanks again!
TickerTwit wrote: This applies to capital gains only. If you are engaged in an "Adventure or Concern in the Nature of Trade" (as the CRA defines it), the superficial loss does not apply.
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TOMMY1 wrote: Be careful when selling to offset capital gains as the losses will not be recognised by CRA as capital losses if you have bought or sold within 30 days (before or after the sale date). These kind of losses are seen as "superficial loss".