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Gold/Mining/Energy : TAXES, TAXATION, TAX and Canadian stocks -- Ignore unavailable to you. Want to Upgrade?

To: Kayaker who wrote (470)	11/26/2001 11:11:57 PM
From: russet	Read Replies (1) \| Respond to of 548

<<<As you noted, it is only for Canadian securities. Note also, it won't protect you if they deem you to be a 'trader' in an audit.>>> You may want to flush that statement out a bit. I had the pleasure of entertaining a Darth Vader (dark side tax auditor) in my house for a week,...he was rather perturbed when I suggested I would elect to have all my trades be considered capital gains, as he had deemed me to be a trader in his audit, and the result was a hefty CPP bill with interest over several years. It seems that if you don't sell or promote securities, and have an arms length relationship with all the securities you trade (no private placements, and possibly no IPO's but not sure about that), you can make the election to have everything be treated as capital gains and have it stick. Once done, you can never go back. In my case, the deductions I can claim having my trading as a business overweigh the advantage of having 50% of the income taxed as per capital gains. I can claim all interest charges on loans used to invest in anything (something you can't do for capital gains income). As well I can deduct CPP and can claim RRSP deductions on income earned from trading, a welcome retirement package and safety net for someone who has never worked for someone else. If you make a lot of trading securities, you can incorporate and get preferential tax rates if you make a lots of money in other ways. A discussion with "the tax man" is the only way to be sure how they will react,...and you can do it anonymously from a pay phone if your worried about them learning your identity (ggggggggggggg).