# Two questions about reporting trades



## Dibs (May 26, 2011)

I have two questions about reporting trades and the taxman

1. I bought 100 shares TRP in April, 50 more in October, and then sold all 150 in November. When I report the sale, it asks for the date of purchase. Do I report the sale of 150 shares together, and if so, what is the purchase date? Or do I report them separately with two different purchase dates?

2. Have you (or anyone you know) ever been labelled by the CRA as a "trader" and thus have your/their gains and losses 100% taxable? How many trades does it take for the CRA to treat your trading as "business income"?


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## CanadianCapitalist (Mar 31, 2009)

1. I put in the date when the first purchase was made. See example in the document below:

http://www.cra-arc.gc.ca/E/pub/tg/rc4169/rc4169-11e.pdf

2. No. I do only a handful of trades per year, so I doubt I'll ever be labelled a business by the CRA.


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## caricole (Mar 12, 2012)

CanadianCapitalist said:


> 1. I put in the date when the first purchase was made. See example in the document below:
> 
> http://www.cra-arc.gc.ca/E/pub/tg/rc4169/rc4169-11e.pdf


As for canadian capitalist, it passes thats OK

I do the contrary, and it also passes

Anny subsequent transactions, the ACB is adjusted

I use the last ACB date, and it passes to, since SEVERAL years and it passes also

So you can chosse any of both approches, as long as you are CONSISTANT for the futur

Keep in mind, some adjustments of ACB can stradle differend taxation years...I find it more convinient to keep and transact on the LATEST ACB, and at the same time keep records of the adjustements that happened over the past years

It is a situation where MORE THAN ONE solution is acceptable

AS for capital transactions, if you chose ONCE to be considered CAPITAL TRANSACTIONS..it remains for ever..EXEPT..if CRA choses to change your choise....at this point, you could always CHALLENGE their choise

It is wise to fill in and mail T 123

http://www.cra-arc.gc.ca/E/pbg/tf/t123/t123-07e.pdf

my opinion


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## bayview (Nov 6, 2011)

I too hear using T123 is a the way to go. The matter depends on the circumstances as these court cases showed:

http://www.cch.ca/newsletters/FinancialPlanning/June2008/index.htm

http://www.taxwiki.ca/Frederick+Simon+Hawa+v+Her+Majesty+The+Queen,+2006+TCC+612+(TCC)


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## cardhu (May 26, 2009)

Dibs said:


> How many trades does it take for the CRA to treat your trading as "business income"?


There is no fixed number or frequency ... CRA makes its determination based on the specific circumstances of the case, not the number of trades.

As for which date of purchase to report on Schedule 3, it is not particularly important to be consistent. I always use the initial purchase, but the truth is it doesn't much matter what you put in that field, the numbers that matter are you proceeds of disposition and ACB.

I wouldn't be so quick to make the election referred to above ... it is irreversible, and CRA is not bound to it ... only you are.


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## Eclectic12 (Oct 20, 2010)

caricole said:


> As for canadian capitalist, it passes thats OK
> 
> I do the contrary, and it also passes
> 
> ...


So for the contrary version, there would be only one sale commission - do you split it over the two line items?


As for both methods being acceptable - unless CRA explicitly says so, I'm not so sure. All the examples I can remember from CRA's web site use CC's method.

Then too - from a CG or CL perspective, all 150 shares were sold at the same time so there is only one CG event. CRA may not notice as their software is probably checking the totals instead of the line items, until one is selected for an audit.


IAC, for this particular example, it all works out to the same assuming no math or bookkeeping errors are made.
IMO, there is one sale so I personally find it easier to use one line item.



Cheers


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## Toronto.gal (Jan 8, 2010)

cardhu said:


> I always use the initial purchase, but the truth is it doesn't much matter what you put in that field, the numbers that matter are you proceeds of disposition and ACB.


I tend to agree with this, though I had thought that dates were reviewed to a certain degree to help determine whether investor was 'managing investments vs trading.'

So, are you saying that if you purchased a stock, say 5 times in one month, and then sold them all the next [not at the same time], that you would only enter the 1st date of your purchase and last date when you sold?


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## cardhu (May 26, 2009)

Toronto.gal said:


> I tend to agree with this, though I had thought that dates were reviewed to a certain degree to help determine whether investor was 'managing investments vs trading.'
> 
> So, are you saying that if you purchased a stock, say 5 times in one month, and then sold them all the next [not at the same time], that you would only enter the 1st date of your purchase and last date when you sold?


Schedule 3 doesn't require actual dates ... only years ... so multiple purchases made in the same year would all be reported the same anyway ... the actual dates matter, of course, for your tracking of ACB, but you don't need to report that level of detail on Sched 3.

I don't trade frequently enough to risk having my investments treated as a business (I assume that's what you're referring to), but I imagine that if CRA were to make that sort of assessment, they would do it from the trading histories submitted to them by the brokers, not from the info you submit on Sched 3.


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## Toronto.gal (Jan 8, 2010)

Thanks for the response cardhu [and I meant date review from trading histories].

I trade frequently, but mostly under registered accounts.


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