Forex profits are taxable in Canada. The question is how — and the answer changes your tax bill significantly.
Capital gains vs business income
Capital gains are taxed on a 50% inclusion basis. Business income is fully taxable at your marginal rate — but losses are also fully deductible against other income. The CRA decides based on the overall picture, not a single rule.
What the CRA weighs
- Frequency — dozens of trades a week looks like a business
- Holding periods — minutes and hours vs weeks and months
- Time and knowledge — trading as your main activity vs occasional investing
- Leverage and intent — speculating on short-term moves points to income
Most active day traders should expect business-income treatment; a swing trader with a day job may plausibly report capital gains. Edge cases are exactly where professional advice pays for itself.
Records to keep from day one
Every regulated broker provides annual statements, but keep your own log: dates, pairs, sizes, CAD-converted profits and losses, and fees. If you trade a USD account, you must convert to CAD — the CRA accepts the Bank of Canada rate on the transaction date or, in some cases, the annual average rate applied consistently.
One common mistake
Not reporting at all because "the account is small" or "the broker doesn't issue a tax slip." Trading profits are taxable whether or not a slip exists.