Wealthsimple Tax survey finds some stock and crypto investors might be missing half the picture
As tax season approaches, Wealthsimple, the business behind some of Canada's most popular digital financial products, has discovered a false sense of confidence among a large proportion of Canadian retail traders.
Wealthsimple Tax, the company's do-it-yourself tax platform, commissioned a cross-country study to see if customers who traded stocks and cryptocurrencies in 2021 felt prepared to file their taxes this year.
It came as no surprise that more than two-thirds of Canadian retail traders are unaware of the tax implications of stock and cryptocurrency trading. While most respondents felt confident about their taxes, about the same number said they were confused how to record trading activities on their tax return, according to the Angus Reid Forum survey.
One in every five retail stock traders (19%) and one in every four crypto traders (26%) said they were apprehensive about paying their taxes this year because they didn't know how to claim capital gains.
Compared to 66% of respondents who traded equities, 85% of crypto traders stated they had little to no knowledge of how to record capital gains on their tax return.
"Crypto is a new asset class for many Canadians and our research shows that while there is significant interest in the space, there is still a critical need for education and support," Evan Thomas, Head of Legal for Wealthsimple Crypto, stated. "It's important Canadians understand not only the risks, but also the impacts of crypto and retail trading as part of their full, annual financial picture."
The GameStop phenomenon triggered a rise in stock trading among young investors, as well as increased interest in cryptocurrency, making 2021 a crucial year for retail trading in Canada.
Over half of the retail traders polled claimed they increased their trading activity in the previous year.
Two out of three (67%) of cryptocurrency traders said 2021 was their first year. Crypto trading was most popular among Generation Z and millennials (32% of 18- to 40-year-olds).
"We're building tools and educational resources needed to help Canadians navigate tax questions and changes they encounter each year," said Nick Galasso, Head of Wealthsimple Tax. "For many this tax season, that includes investments made in stocks and cryptocurrency.”
Wealthsimple is the first firm in Canada to provide both a regulated platform for purchasing and trading cryptocurrency and a free, do-it-yourself tax filing platform to assist individuals in submitting their tax returns.
For the first time, Wealthsimple Tax will compute capital gains and losses for bitcoin trades for up to 500 transactions across more than 300 supported exchanges as part of its offering this year.
