Schedule 3 (Canada)

CRA Schedule 3, "Capital Gains (or Losses)," is the Canadian tax form where you report the disposition of capital properties. It's the Canadian equivalent of the U.S. Form 8949.

Reporting prediction market trades

For each closed prediction market position, you report:

• Description of the property (e.g., "Prediction market contract — Kalshi")
• Date of acquisition
• Date of disposition (settlement date)
• Proceeds of disposition
• Adjusted cost base (ACB)
• Gain or loss

From Schedule 3 to your T1

The total capital gains from Schedule 3 are multiplied by the inclusion rate (50% for the first $250,000, 66.67% above) and entered on Line 12700 of your T1 return. Capital losses can offset gains in the current year or be carried back 3 years / forward indefinitely.

Superficial loss rule

Canada's superficial loss rule (similar to the U.S. wash sale rule) disallows losses if you repurchase the same or identical property within 30 days. For prediction market contracts on different events, this generally doesn't apply.

CRA compliance considerations

The CRA has been increasing its focus on unreported investment income. While US prediction market platforms don't report to the CRA directly, information sharing through the Canada-US Tax Treaty and CRS (Common Reporting Standard) means the CRA may become aware of foreign trading activity. Voluntary disclosure is strongly recommended over non-reporting.

Frequently asked questions

Is Schedule 3 similar to the US Form 8949?

Yes. Both forms report individual capital gains and losses with dates, proceeds, and cost basis. The key difference is that Schedule 3 feeds into the Canadian inclusion rate system (50% or 66.67% taxable), while Form 8949 reports the full gain/loss with 100% subject to US tax rates.

Can I carry capital losses forward in Canada?

Yes. Net capital losses can be carried back 3 years or forward indefinitely. This is more flexible than the US system, which only allows a $3,000 annual deduction against other income with indefinite forward carry.