*The Commerce Journal>>>Canada Taxes

Canadian Tax Short Selling Stocks?

I know that capital gains/losses from going long on stocks are reported on Schedule D on the Canadian Tax forms. But, where do you report losses from short selling stocks? (Profits/losses from short sales are considered non-capital gains/losses, right?)

* Correction, I meant Schedule 3... My bad.

CCRA deals with Transactions in Securities in IT- 479R. Paragraph 18 of the IT says: "The gain or loss on the short sale of shares is considered to be on income account (non capital gains or losses). See below:

http://www.cra-arc.gc.ca/E/pub/tp/it479r...

You may report the net income (selling price less cost) as "other investment income" in
Schedule 4:

Statement of Investment Income

II - Interest and OTHER INVESTMENT INCOME (see line 121 in the guide)

LINE A: Specify before entering the amount: ^

Line 121: Enter this amount on line 121 of your return

Both of those would go in Section 3 of Schedule 3.

Whether a profit or loss from selling stock is capital or non-capital depends on if you can be construed as carrying on a business. If you do this occasionally and are not in the business of investing other people's money, it seems you are dealing with capital transactions that go in Section 3 of Schedule 3 (shares, etc).

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