How does CRA view the following situation ?
person is running a trading business, he does long term investments in his tfsa and RRSP but in his margin account and his other trading accounts all of his gains and losses are seen as trading income by the cra - it is business income/losses and has been taxed as such for the past 15 years.
The trader files a t2125 each year and has had no issues. The shares and investments in the tfsa are not included in his business income.
The situation in question is that they have made an investment in a pre-ipo company that recently went public. The individual moved the shares to the same brokerage where they do most of their trading but kept them in a separate cash account. There have never been any transactions in that account other than the initial movement of the share in. Question is, if he were to sell these shares, could they be treated as cap gains or would it be considered trading income?
Looking for real data here with backed up sources or examples of treatment of similar situations. Is it possible to justify these as not part of the trading business and it is more on the long term investment side?
FWIW - Initial shares were purchased in 2017, company went public in 2024 and shares have been sitting in this separate account for over a year untouched. What are your thoughts?
TIA!