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How are options taxed in Quebec?

If you live in Quebec, every option trade goes on two returns, the federal one and the Quebec TP-1. The rules behind them mostly match. The work is keeping one set of records that feeds both.

Options guide · 8-minute read · Updated 2026-10-28

The short answer

Quebec residents file two income tax returns. The federal return goes to the CRA. The Quebec return, called the TP-1, goes to Revenu Québec. An option trade in a regular account shows up on both.

The way a sold option is treated is generally the same on both returns:

• The option expires. The premium is usually a capital gain in the year you got it.
• You buy it back. The premium minus the cost to close is a gain or a loss.
• A put you sold is assigned. The premium lowers the cost of the shares you bought.
• A call you sold is assigned. The premium is added to what you got for the shares.

So you don't learn two systems. You learn one, and you report it twice. This page is part of my map of selling options in Canada.

Two returns, two sets of forms

The forms have different names, but they do the same job.

Most option sellers who trade now and then report on the capital-gains schedules. Only part of a capital gain is taxed. That part is set by the inclusion rate. Quebec has generally matched the federal rate, but check both for the year you're filing.

Capital gains or business income?

This is the big question, and it's about you, not the option.

If you invest and trade now and then, your gains are usually capital. If your trading looks like a business, they can be business income. Then the whole gain is taxed, and losses are business losses.

Both tax agencies look at the same kinds of facts. These are often called the Badges of trade:

• How often you trade, and how long you hold.
• How much time you spend on it.
• What you know about markets.
• Whether you use borrowed money.
• Whether trading is a main source of what you earn.

Selling puts and calls every week on many stocks can start to look like a business. Running the wheel strategy a few times a year usually looks like investing. There's no line drawn in a number. If you're near the edge, that's the question to bring to a tax professional.

A worked example through one wheel (hypothetical)

All numbers are made up, in Canadian dollars. You live in Quebec, trade in a regular account, and report on capital account. (An illustration, not a trade idea.)

February. You sell one $40 put on a made-up stock, XYZ, for $1.00. You collect $100.

March. XYZ drops to $37. The put is assigned. You buy 100 shares at $40, or $4,000. Your Adjusted cost base is $4,000 − $100 = $3,900, or $39 a share.

April. You sell one $41 call for $0.50. You collect $50. XYZ keeps falling and the call expires.

June. XYZ is at $34. You sell the shares for $3,400.

The same three lines go on Schedule 3 and on Schedule G. The $450 net loss can offset other capital gains on each return. It can't be used against your salary. An unused capital loss can generally be carried back three years or forward with no time limit.

Notice what the premiums did. They took $150 off a $600 drop in the shares. They didn't stop it.

When a trade crosses New Year's

Say you sell a put in December and it's assigned in January. At first, the premium looks like a gain for the December year. When the put is assigned, the premium moves into the shares' cost instead. That can mean changing the earlier year's return.

In Quebec, that means two changes: one with the CRA and one with Revenu Québec. Keep the dates of every option you sell, so you can see which ones crossed a year-end.

What's different about living in Quebec

The treatment of the trade is mostly the same. What changes is the paperwork around it.

• Two returns. Every gain, loss and adjustment goes on both. If you fix one, fix the other.
• Quebec slips. Revenu Québec has its own slips, called relevés. Some brokers send one next to the federal slip. Some don't. Your own records are what count.
• Investment expenses. Quebec has its own rule here. You can't deduct more investment expenses, like interest on money borrowed to invest, than your investment income for the year. The extra can be carried back three years or forward. Revenu Québec explains it under line 260. Most option sellers in a cash account never meet it.
• Account names in French. A TFSA is a CELI. An RRSP is a REER. A LIRA is a CRI. The tax treatment of each is the same as elsewhere in Canada.

Inside a TFSA, gains are generally not taxed on either return. Inside an RRSP, nothing is taxed until you take money out. Covered calls are widely allowed in both. Cash-secured puts depend on the broker, and options permissions differ by broker.

Options on US stocks

Most option volume is on US stocks, priced in US dollars. Both returns want Canadian dollars. Each premium, purchase and sale is generally converted at the exchange rate for the day of that trade. A currency move can turn a small gain into a small loss, or the other way. See converting US option premiums to CAD for tax.

Where to check, and what to keep

The rules on this page are as of October 2026. For Quebec, the official source is Revenu Québec's guide to the TP-1 return. For the federal side, it's the CRA's guide to capital gains.

Keep these for every option you sell:

1. The date you sold it, the stock, the strike and the premium, in Canadian dollars.
2. How it ended: expired, bought back, assigned or called away.
3. The ACB of any shares, with put premiums taken off.
4. Any trade that crossed a year-end.
5. The exchange rate used for each US-dollar trade.

One spreadsheet with those columns fills in both returns. See ACB after assignment, worked out for a full wheel cycle with the cost tracked line by line.

Questions