Forex Trading Tax in Canada

Today there is a lot of awareness about earning opportunities from things like Forex trading, and everyone seems interested in making good profits. Sometimes it gets too fascinating that people almost forget about the important things like Forex trading Canada tax. If you are going to begin your Forex trading journey in Canada or have been trading here for a while, then there are a few things you need to consider.

Transparency about the taxes and your trading platform is on the top of that list of important things. So, here we will be discussing everything you need to know.

Top Canadian Brokers for 2022

Broker
Rating
Regulated
Bonus
Min. Deposit
Max. Leverage
1.
FXCC

VFSC, CySEC

100% bonus

$100

500:1

Review » Open Account » Open Account
Terms & conditions apply
Your capital is at risk.
2.
Avatrade

ASIC, CBI, BVI, FSCA, IIROC, FFAJ, JFSA, ADGM FRSA

up to 40% bonus

$100

400:1

Review » Open Account » Open Account
Terms & conditions apply
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
3.
easyMarkets

CySec, ASIC, BVI

up to 50% bonus

$100

400:1

Review » Open Account » Open Account
Terms & conditions apply
Your capital is at risk.
4.
Blackbull Markets

ASIC, VFSC

$10 000 demo

$50

500:1

Review » Open Account » Open Account
Terms & conditions apply
Risk Warning: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money you cannot afford to lose. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any questions or concerns as to how a loss would affect your lifestyle.
5.
Fusion Markets

ASIC, VFSC

N/A

$100

500:1

Review » Open Account » Open Account
Terms & conditions apply
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74-89% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

What are the different Forex trading taxes in Canada?

When trading Forex in Canada, you must pay a tax on your earnings. This tax is different for everyone depending on the following things:

  • Investment option
  • Trading strategy
  • Trading type

Considering these factors, we can divide the Forex trading Canada tax into 2 groups, which are as follows.

Capital Gains

Some traders trade Forex as an investment. For such traders, Forex trading is not the main source of their business and in this case, here are capital gains taxed at a 50% marginal tax rate.

Full Marginal Rate

Some Forex traders take Forex trading as their main source of income. It represents their business and acts as their way of making a living. Here taxes are paid at a full marginal rate tax, and there are some tax benefits that you can claim if you report all Forex trading earnings in the business income category.

Different expenditures in Forex trading apart from your taxes

Everything you must pay when Forex trading is not included in your taxes. However, some of these can be reclaimed if you take Forex trading as your main source of income. Different expenditures in Canada are eligible for 100% loss and profit.

Thus, your tax calculation can be affected by those things. Those expenditures include All fees you must pay to the platform, including deposit and withdrawal. The money you spent on learning and buying equipment for trading. Any internet subscription charges that you are paying solely for trading.

According to Rules in Canada, you can make claims for such expenditures as your business expenditures, and you may get some tax cuts.

How Forex trading Canada tax is better than many other countries?

Forex trading Canada tax is better than many other countries because of proper rules and regulations. CRA deals with everything regarding Forex trading taxes in Canada. So, everyone can be classified into a group according to their way of earning. This simple way of implying rules on all Forex traders in Canada makes the taxes here better than most other places mainly because of the transparency factor.

What is the safest way to start your trading journey in Canada?

If you want to start your Forex trading journey in Canada, the safest way is to start by knowing all the different rules and regulations. First, you must know all the taxation rules classified by CRA in Canada. Next, it will be better if you choose a platform that comes with IIROC regulations. After these things, you can make your trading strategies and decide which options you will choose.

The last thing is making investments and going according to your strategy patently. Getting some risk management tools will always be a better option considering the risk of trading for beginners. You can also gain some experience if your Forex trading platform offers a Demo account.

5 Best Forex trading platforms in Canada

To make the most out of your Forex trading journey in Canada, you must use the right trading platform. The following 5 are our top 5 choices for Forex trading platforms in Canada, considering their overall trading experience.

1. Interactive Brokers

The best overall Forex trading platform in Canada is Interactive Brokers. It brings a great range of trading options for professional traders and experienced people in the trading industry. The average spreads are the least, and the minimum deposit here is also easily manageable. Thus, Interactive Brokers is a good choice for beginners and professionals.

2. Forex.com

Forex.com comes with trust and reliability for traders across the globe, and it brings an impressive range of trading options, including Forex. So, if you are looking for an all-around trading option, then Forex.com is your way to go in Canada.

3. BlackBull Markets

Although BlackBull Markets does not come with IIROC regulation, it is still a growing platform with a reliable experience. It brings MT4 and MT5 trading experience where you can integrate several third-party tools and platforms for an intuitive trading experience.

4. Saxo Bank

Saxo Bank may not be the best choice for beginners because of its huge minimum deposit requirement. However, it is a well-reputed trading platform in Canada with manageable average spreads. Remember that it does not comply with the IIROC regulations, so it is not the most reliable platform in Canada.

5. CMC Markets

The last one is CMC Markets, known for its latest-technology backend bringing you more than 12000 trading instruments. The research and educational tools provided here are also amazing. One of the best things about CMC Markets is that it is a low-cost trading platform.

5 Best Forex trading platforms in Canada comparison

Before you decide which of these you are going to start with, make sure to have a look at this comparison table. If you are focusing more on day trading strategy, you can check these Forex brokers for the best day trading apps.

Platform Minimum Deposit IIROC Regulation Average Spreads
Interactive Brokers $0 Yes 0.6
Forex.com $100 Yes 1.1
BlackBull Markets $50 No 0.8
Saxo Bank $2000 No 0.8
CMC Markets $0 Yes 0.7

While the minimum deposit is important, it is not the only thing you need to consider. When selecting a trading platform in Canada, make sure that you consider the average spread as well as IIROC regulation for a reliable and profitable Forex trading journey.

Conclusion

Keeping track of the Forex trading Canada tax is important, but at the same time, you must be careful about selecting the right tool for your Forex trading experience. However, instead of worrying about how much tax you have to pay, it is a better option to look for a tool that brings good trading features and techniques. In this way, you can save some amount on your taxes. In this way, you can also enrichen your Forex trading experience.