Introduction and Disclaimer
Since the main focus of my page and YouTube channel is sponsored merchant rating programs, I often get the question “what are the taxes for sponsored merchants?”. Fair question of course. Fortunately, it’s very simple.
Before I start, the normal disclaimer that everyone gives for anything related to taxes and/or future releases. I’m just a random Canadian, I know next to nothing about taxes, and everything below is information to the best of my knowledge, but not meant to be advice. Go find a tax accountant with any specific questions, below is all I have. And it’s just an update. No advice.
If you are interested in futures trading, be sure to check out my Funded Futures Reviews Reviews. I update it every day.
Canadian Income Tax on Futures Company Profits – Short Version
- Profits are treated as ordinary income.
- You will not receive tax return forms from the companies.
- You will submit a W8-BEN form to the company which basically says that you do not live in the US and that you will pay taxes in your home country. The company will ask for this the first time you request payment.
- You don’t pay US taxes to the IRS. You live in Canada, you pay Canadian taxes.
- It is your responsibility to keep track of your payments and pay taxes on them.
- Everything else – consult a tax professional.
Canada and income taxes on future profits from Prop. corporations
Finally, let’s get to the topic of the article – taxes for funders who are Canadian. Fortunately, taxes are pretty simple with these programs.
I mentioned earlier, do your own research on how you will be taxed in your country, and this is still true. Basically the drill line would be dealt with however you would be if you are being paid by a US company as a contractor. Remember, you are NOT trading your own capital. Basically you work for a company as a trader of their capital and for that they pay you 80% (or whatever percentage). So it is more likely that you will not pay any capital gains. You don’t need to track every transaction. It’s no different than if a US-based company hired you as an independent graphic design contractor and paid you per project. You are a freelancer.
Also, you will not receive any statement from the company regarding the tax form for your taxes as a sponsored merchant. US companies are required to issue 1099s to US-based contractors, but for non-US payers, they don’t. There’s really no reason, the purpose of the 1099 is to inform the IRS, the US tax authority, about transactions and payments to US based contractors who have to pay taxes. The IRS could care less that Mr. Trader in Fiji received $20,000 because the IRS is not going to collect tax on it.
I should mention at some point during the year you will be asked to give the company a form, an IRS form no less, basically stating that you live outside the US, the company does not have to withhold taxes and you are responsible for paying taxes in the country your. This form is not actually filed with the IRS, the financing company keeps it on file. That way, if they ever get audited and the IRS says “hey you pay Mr. Merchant why don’t you file a 1099?”, the finance company can fill out your form showing you are not a US resident and they are not required to withhold nor report your income. This form is a W8 BEN for most people, but it may differ depending on whether you are operating as an individual or business and some other reasons I don’t really know. (Remember, this is information, not advice).
conclusion
Let me first reiterate that I am certainly not a tax expert, and that should be clear from the above. But I know enough to let you know that when people start talking about capital gains, they track every transaction, what forms do I get, I can answer the basics. Based in the US – you are a 1099 contractor, you will receive one after the end of the year. I pay taxes. Outside the US – you will receive nothing for your taxes as a sponsored merchant and it is your responsibility to pay taxes on what you have done. Tracking shouldn’t be that hard, even if you withdrew every week, that’s 52 payments, add them up. Pay taxes as regular income. Done.
Get notified about new merchant review promotions
Submit your email if you’d like to be notified of new merchant review offers. I never spam or sell anything. Usually 2-3 emails are sent a month with the latest offers.
Reviews and merchant rating information
Risk Disclosure:
Futures and currency trading involve significant risk and are not for every investor. An investor could potentially lose all or more of the initial investment. Venture capital is money that can be lost without jeopardizing one’s financial security or lifestyle. Only venture capital should be used for trading and only those with sufficient venture capital should consider trading. Past performance is not necessarily indicative of future results.
Disclosure of Hypothetical Performance:
Hypothetical performance results have many inherent limitations, some of which are described below. No representation is made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are often stark differences between the hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trades do not involve financial risk and no hypothetical trade record can fully explain the financial risk impact of actual trades. for example, the ability to withstand losses or stick to a certain trading schedule despite trading losses are important points that can also negatively affect actual trading results. There are many other factors related to the markets in general or the implementation of any particular trading program, which cannot be fully taken into account in the preparation of hypothetical performance results, and all of which can adversely affect trading results.
You can read more here: Risk Disclosure
Affiliate disclosure:
External links on my website and in my video descriptions to merchant rating companies and software companies are primarily affiliate links. I earn a commission from these companies for any sale made by people who visit these links. That being said, I only recommend companies and software that I personally use and actually recommend. Believe me, I turn down many companies that approach me. You can read my full Affiliate Disclosure here.
Additional Disclosure:
The content provided is for informational purposes only. I do my best to keep the content current and accurate by updating it frequently. Sometimes the actual data, rules, requirements and more may differ from what is stated on our website. CanadianFuturesTrader.ca is an independent website. You should always consult the rules, FAQs, knowledge base and support of any of the sites and companies we link to or discuss on our site. The information on their website will always be what ultimately dictates the current rules of their program, software or otherwise. While we are independent, we may receive compensation for advertising, sponsored products, or when you click on a link on our site. Contributors and authors are not registered or certified financial advisors. You should consult a financial professional before making any financial decisions.
