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Hello everyone,

I have been trading for about 6 months now and I am starting to produce consistent profits. I am not sure however about how to structure my trading business.

Here is just some more info about my situation. I day trade cryptocurrencies and generally hold each coin/token for a span of 3 minutes up to 4 hours. I am using an account that is registered under my personal name. I have not set anything up as a business yet but I am getting to a point where I think I should consider doing something about it.

Do I need to set up a CCPC? If so, when should I do that (how much money should I be making - currently I am making about $150-200 per day but that will start increasing very soon?)

I have been trying to find somewhere a clear answer for how to structure my trading business before speaking to a CPA but it has been quite difficult to find consistent information about this topic.

I would appreciate the advice of anybody who has experience on this matter.

Thank you so much!
 

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Hello everyone,

I have been trading for about 6 months now and I am starting to produce consistent profits. I am not sure however about how to structure my trading business.

Here is just some more info about my situation. I day trade cryptocurrencies and generally hold each coin/token for a span of 3 minutes up to 4 hours. I am using an account that is registered under my personal name. I have not set anything up as a business yet but I am getting to a point where I think I should consider doing something about it.

Do I need to set up a CCPC? If so, when should I do that (how much money should I be making - currently I am making about $150-200 per day but that will start increasing very soon?)

I have been trying to find somewhere a clear answer for how to structure my trading business before speaking to a CPA but it has been quite difficult to find consistent information about this topic.

I would appreciate the advice of anybody who has experience on this matter.

Thank you so much!
I wouldnt think CRA would have much interest until you are covering all your expenses, losses.If I was in your shoes I would keep my head down and keep very accurate records of all trades.If you are showing taxable income,you should pay the taxes.I think you should be making a 100,000$ a yr before starting a business.
 

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Do I need to set up a CCPC?
No, you don't have to go that far and you can do it all under your personal name. To file as a trading business, you can still submit a personal income tax return but include T2125 for self employment. You can search around the internet to see how day trading is reported on T2125.

There are probably even some posts on this forum, so use the search bar and see one of the older threads. But before you even go that far, consider if this really is a business. Do you spend substantially all of your time doing this, or are you just placing a few trades in your spare time? If it's using a lot of your time and is a large number of trades, then it might be a trading business.

On the other hand if it's just a spare time activity, and you have another job, this might be something you could just report on the plain old Schedule 3 as capital gains and loss. Doing that has some big advantages. Capital gains are taxed at a lower rate, and cap losses can be carried forward indefinitely. Plus it's much simpler to file.

If you end up generating losses for the year, and more losses next year, the CRA may question whether it's a business at all. So it's not always clear whether trading should be reported as purely personal Schedule 3 cap gain/loss, or T2125 as a business.

In any case, no matter what you do, keep accurate records and of course all gains/losses must be reported SOMEHOW no matter which way you decide to file. This is the key point that will keep you out of trouble.
 

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The T5008 from your brokerage will tell CRA your trading activities.

If you already know you're a day trader, then better not wait for any nasty letters from CRA about taxes owing.

Start claiming your capital gains as income instead of declaring only half of it as taxable.
 
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