Chances are that if you invest in the markets outside of your RRSP or RRIF, you treat any profits you realize from your investing activities as capital gains. The obvious advantage is that only half of the capital gains are taxed at your marginal tax rate. The disadvantage is that any losses incurred can only be applied against other capital gains, not against other sources of income. Day traders, on the other hand, who make their living by frequently buying and selling securities, are considered to be engaged in the business of buying and selling securities, and generally must report any profits as business income. For Ontario residents earning $220,000 of more, the tax rate is almost 50%! However, by setting up your own private company through which you manage your portfolio as a day trader, even taxpayers who are not licenced in the sale of securities, can take advantage of the small business deduction and pay corporate tax at the low rate of 15.5% on the first $500,000 income! If you would like to discuss this or any other tax planning matter, please feel free to contact us.