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How do you report options on a Canadian tax return?

Most investors report option trades as capital gains and losses on Schedule 3. Each ending is handled a little differently. An expired option is a gain. An assigned one changes the shares' cost instead.

Options guide · 9-minute read · Updated 2026-10-28

The short answer

If you sell options in a regular account as an investor, you generally report them as capital gains and losses. That goes on Schedule 3 of your federal return. Only half of a net capital gain is taxed, as of October 2026.

If the CRA sees your trading as a business, the profit is business income instead. That goes on form T2125, and all of it is taxed.

Trades inside a TFSA, RRSP, RRIF or FHSA aren't reported at all.

This page is part of my map of selling options in Canada. Every rule here applies to each step of the wheel strategy.

Step 1: decide capital or business

This choice comes before any number. The CRA looks at your whole pattern, not one trade. It weighs things like:

• How often you trade, and how long you hold.
• How much time you spend on it.
• Your knowledge and work background.
• Whether you trade with borrowed money.

These are called the Badges of trade. Someone who sells a call a month on stocks they've held for years looks like an investor. Someone who trades all day, every day, may look like a business. My page on whether selling options in a TFSA is a business goes through each sign.

Option sellers get one more rule. The CRA's old bulletin on securities, IT-479R, says a call sold on shares you own follows those shares. Options sold on shares you don't own, like a put, are treated as business income by default. But the CRA accepts capital treatment if you report that way every year.

So pick one treatment and use it the same way every year.

Step 2: gather your slips, then don't trust them alone

Your broker will likely send a T5008 slip. It lists sales of securities. Many brokers also send a yearly report of gains and losses.

These help, but options trip them up:

• Expired options often aren't on the slip. The CRA's T5008 guide doesn't make brokers report an option that just expires.
• A sold option may show proceeds with no cost, or a cost with no proceeds. The slip doesn't know the full story.
• Assignments may not be linked to the put or call that caused them.
• US trades may be in US dollars. You must convert them. See converting US option premiums to CAD.

So build your own list. Every option you sold: date, strike, premium, how it ended. Then match it against the slips.

Step 3: report each ending the right way

Here's the general pattern for an investor in a regular account:

The shares' cost for tax is the Adjusted cost base, or ACB. A put premium lowers it. That's why an assigned put has no tax event of its own. Our assignment guide shows what an assignment looks like in your account.

Crossing a year-end. Say you sell a put in December and it's assigned in January. The premium was a gain in the first year. Once it's assigned, it moves into the shares' ACB instead. The earlier return may need to be changed. Ask a tax professional how to handle it.

A worked year (hypothetical)

All numbers are made up, an illustration, not a trade idea. Canadian dollars, one investor, a regular account, one stock: XYZ.

Add up the capital lines: $100 − $150 + $380 + $60 = $390 net capital gain. Half of it, $195, is the taxable part.

The April row is the one people forget. Buying back a put at a loss is a real −$150 capital loss. It lowers the year's net gain. Leave it out, and you pay tax on money you didn't make.

If the same year were business income, all $390 would go on T2125. And a business loss can offset other income, not just gains.

Step 4: fill in the return

1. Total your capital gains and losses from your own list, in Canadian dollars.
2. Enter them on Schedule 3. Your tax software will ask for each sale's proceeds, its ACB and any costs. Commissions are added to the cost, or taken off the proceeds.
3. Carry the taxable half to your return. Software does this step for you.
4. A net capital loss can't offset your salary. It can be carried back three years or forward to any year, against capital gains.
5. Quebec residents also file a provincial return with the same trades. See how options are taxed in Quebec.

The CRA's capital gains guide and Revenu Québec's guide have the current forms and lines. Rules and rates here are as of October 2026.

Don't forget the superficial loss rule

Sold shares at a loss, then had a put assigned on the same stock within 30 days? The loss may be denied for now and added to the new shares' cost. That's the Superficial loss rule. My page on the superficial loss rule with options walks through the cases.

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