Taxes for option traders

[Veridicus]

I figured someone here should know this since I can’t seem to find the answer on the CRA’s website. I made a bit of money trading put/call options last year. As far as taxes are concerned, would my profits be treated as a capital gains the way trading stock are? I also let one of my options expire worthless. Would this be a capital loss?

Input would be much appreciated.

 

[K Douglas]

I figured someone here should know this since I can’t seem to find the answer on the CRA’s website. I made a bit of money trading put/call options last year. As far as taxes are concerned, would my profits be treated as a capital gains the way trading stock are? I also let one of my options expire worthless. Would this be a capital loss?

Input would be much appreciated.

Trading in puts and calls are technically not capital gains and losses but CRA will let you claim a few as capital gains. If you did a significant # of trades in options vs. regular shares then it should be treated as income rather than capital.

 

[scrooge]

Trading in puts and calls are technically not capital gains and losses but CRA will let you claim a few as capital gains. If you did a significant # of trades in options vs. regular shares then it should be treated as income rather than capital.

Not sure how accurate your first statement is, while the frequency you refer to in your second statement is only one of a few factors that should be considered...

The characterization of securities transactions, whether shares, options, or debt, depends on the facts and circumstances. For example, if used as a hedge, the characterization follows that of the underlying security.

In any event, here is the CRA's position on options which can be found using the CRA search function.

http://www.cra-arc.gc.ca/E/pub/tp/it479r/it479r-e.html