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Stocks, Bonds etc.  ->  Investing Tax Issues -> Futures contracts, commodity futures

Futures Contracts, Commodities Futures

A futures contract is a contract to buy or sell a product at a fixed price on a specified date, usually traded on futures exchanges.

Futures contracts are not qualified investments for a registered account such as a Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF), or Tax Free Savings Account (TFSA).

Gains or losses on commodities or commodity futures may be treated as capital gains (50% of gain subject to tax) or income (100% of gain subject to tax), depending on the circumstances.

See Canada Revenue Agency (CRA) interpretation bulletin IT346R Commodity Futures and Certain Commodities (Archived).  

In paragraphs 12 and 13 of IT346R, interest on money borrowed to purchase futures contracts is discussed.  If the taxpayer's gains on futures contracts are income gains, then interest is a deductible expense.  If the taxpayer's gains are capital gains, then interest is not deductible, and cannot be deducted, nor can it be included in adjusted cost base of the contracts.

Tax Tips:

Futures contracts are risky investments, and are not for a novice investor.

Get professional advice on determining adjusted cost base and how to account for gains and losses.

Revised: October 26, 2023


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