The capital-vs-business line
Occasional investing produces capital gains — only the taxable portion is included. Frequent, business-like trading can be reassessed as business income, where the full gain is taxable. There is no bright-line number of trades; the CRA looks at the whole pattern of activity.
What tips it toward business
- High frequency of buying and selling.
- Short holding periods — in and out over days or hours.
- Substantial time spent researching and trading.
- Market knowledge and a systematic, profit-seeking approach.
- Leverage — financing trades with borrowed money.
Don’t day trade a TFSA
The CRA has successfully reassessed active traders whose TFSA looked like a business, making the account’s gains taxable despite the shelter. Registered accounts are meant for investing, not for running a trading operation — high-velocity trading there carries real risk.
Records get harder, not easier
High trade counts multiply cost-base tracking, superficial-loss checks, and (for foreign names) FX conversions. Whether you end up on capital or business account, you need clean, dated records of every fill — which is exactly where manual spreadsheets collapse.