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Canada a tax haven!?

Quick study of short term gain IRS vs CRA


CANADA - For the past 20 years, capital gains in Canada have been 50% taxable. Depending on one's province of residence, for high-income earners, the marginal tax rate on capital gains in 2020 can be 27%.


Let's use cryptocurrency as our short-term gain example. Treaty sources non-FIRPTA gains to residency and IRS treats cryptocurrency gains/losses same as non-FIRPTA property gains/losses.


Keep eye on Canada's March 2021 budget for potential increase in capital gains % taxable (e.g., 75% vs 50%) since according to the 2020 Report of Federal Tax Expenditures, only partially including into taxable income capital gains for individuals and corporations will result in a $22 billion “tax cost” to the government in 2021. Not to mention all the money Canada has sunk into call centers calling quarantined people all day (I wonder why they didn't instead spend those funds on expedited vaccines and treatments).


USA - Short-term capital gains are generally taxed at a 37% federal rate, plus the 3.8% Net Investment Income Tax (NIIT) = 40.8%. A California taxpayer with more than $1,000,000 of taxable income would pay an additional 13.3% = 54.1% combined tax rate.


Is Canada a cryptocurrency short term gain tax haven? Who wuddathunk Canada could be in same sentence as tax haven!?


#tax #investment #cryptocurrencytrading #IRS #CRA #short term capital gain

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