Transaction costs in Canada on US stocks:
I pay US$39 base commission plus 8 cents per share at a discount broker. Full service guys charge many times this. Plus, I pay 50 cents per trade Canadain tax, and about 40-50 cents US tax. This comes to about US$850 to trade 10,000 MSFT. The really big hit comes with income tax. Persons who trade for a living (like me) are classed as professionals and must report capital gains as income. Our current marginal rate is 54%. So if I sell 1000 shares of MSFT at 100, with my cost base below 10, my before tax gain comes to $89,880, creating a tax obligation $48,500. This leaves me with $51,500 in my pocket. As you can see, MSFT must drop to below 51 for me to re-establish my position. I've rounded numbers for simplicity, but the ugly picture is still quite visible. Hope this answers you question, you lucky, low-tax, Italian resident. PW.
P.S. For those who refuse to pay this much tax, our jails are quite comfortable. :-) |
