Do you know if you are running a business?

November 26, 2012 at 10:12 AM


In a March 29, 2012 Tax Court of Canada case, the issue was whether CRA was correct in disallowing the taxpayer’s claim for business losses on his online share trading activities for the 2001, 2002, 2003 and 2004 taxation years on the basis that they were on account of capital.

Taxpayer Wins!

The Court noted that:

1.  The Appellant has met his onus of showing he was engaged in an adventure in the nature of trade.

2.  The CRA was correct in arguing that the taxpayer lacked the special knowledge necessary to make him a “trader”, however, the telling feature of the Appellant’s conduct is the feverish nature of his trading activities.

3.  The Court noted that if the tables were turned and he had managed to make the profits he dreamed of, the Court could not for one moment imagine CRA characterizing his activities as being consistent with an intention to acquire the shares as a long-term capital investment.

4.  Whenever the Appellant did have some funds, he was back online trading.

Tax Tips & Traps 2012