Transactions by U.S. traders in futures contracts on Winnipeg’s commodity exchange will soon get the same tax treatment as those made on U.S. exchanges.
ICE Futures Canada announced Friday that it’s been designated as a “qualified board or exchange” by the U.S. Internal Revenue Service (IRS).
Thus, ICE Futures Canada contracts entered into from Oct. 1, 2009 onward will, for U.S. market participants, attract the same “60/40 tax treatment” as seen on U.S. exchanges.
The tax treatment allows a U.S. market participant to treat 60 per cent of the gains (or losses) enjoyed (or incurred) by those participants in trading in ICE Futures Canada’s contracts as a long-term capital gain (or loss).
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The remaining 40 per cent of such gains (or losses) are to be treated by the IRS as a short-term capital gain (or loss).
ICE said Friday that there will be amendments to its rules to provide for this new ruling from the IRS, and participants can expect further information detailing the new rules and the resulting obligations of participants that will arise.
ICE on Friday advised affected participants to consult with their tax advisers in relation on how the ruling relates to them “in the context of their respective business arrangements and structures.”
To comply with the ruling, all ICE Canada participants registered in the categories of “Direct Access Trading Participant” and “Trading Participant” are required to provide the ICE with their U.S. Tax Identification Number, if any, and to “keep the (ICE) apprised” of its executive officers.
