The Canada Revenue Agency has an audit project targeting Canadians it feels are in the business of trading securities and using their tax free savings accounts to shelter the proceeds.

To determine whether something is operating as a business, the CRA typically weighs eight factors, legal sources say. And although none of the eight factors listed below may be sufficient on its own, a combination of them can lead to an audit, tax and legal experts suggest.

Ultimately, the CRA can say a taxpayer has broken the rules on a balance of probabilities and it’s up to the person to prove otherwise.

The eight factors are:

Frequency of transactions — a history of extensive buying and selling of securities or of a quick turnover of properties

• Period of ownership — securities are usually owned only for a short period of time

• Knowledge of securities markets — the taxpayer has some knowledge of or experience in the securities markets

Trading experience — security transactions form a part of a taxpayer’s ordinary business

Time spent — a substantial part of the taxpayer’s time is spent studying the securities markets and investigating potential purchases

• Financing — security purchases are financed primarily on margin or by some other form of debt

• Advertising – the taxpayer has advertised or otherwise made it known that he is willing to purchase securities

Nature of the shares - normally speculative in nature or of a non-dividend type