Canadian Income Tax reporting Currency gains or losses

Discussion in 'Taxes and Accounting' started by CDNpatriot1, Apr 24, 2010.

  1. I called Revenue Canada and spoke with three people all of them gave me a different answer on this.

    I have an Interactive Broker account and converted Canadian Dollars into US Dollars. My mistake is that I did not immediately buy stocks. I would put in a limit bid and sometimes it would be months before I bought something. I can't figure out why my dispositions on my T5008 is so high. When I asked whether I have to report my currency gains I was advised that I have to declare the gains or loss of a currency purchase as follows:

    1. I buy some USD then keep it for a time period.
    2. The day of the stock purchase I have to record the gain or loss of the currency.
    3. Then also declare the gain/loss of the stock purchase when I sell.

    Is this how others treat currency gain or losses?
  2. If it were me, I would just convert the purchase price and sale price to Canadian dollars and declare that gain or loss. You can either use the rate of exchange for that day or the average exchange rate for that year available here:

    Unless it's a large amount that you made or lost on the currency exchange, I can't see that they would jail you for not reporting it.

    I live close to the American border and spend just as much in American dollars as Canadian dollars. I use Interactive Brokers to exchange my money as it only costs about $5 per thousand as opposed to $25 per thousand with any bank. It would be next to impossible for me to record every currency gain or loss for Canadian Income Tax. In my mind, I think I'm being fair to the government because I'm not declaring any losses along with any gains. Over time, the losses should be close to the amount of any gains.
  3. This doesn't directly answer your question, but if you make currency gains in Canada with a personal account, they aren't taxable. If you lose, you cannot write it off as a loss as well.
  4. jasonc


    where did you get this from? I just finished my taxes a few weeks ago and my tax accountant had me report them. I had to just convert the purchase price and sale price of the stock from US to canadian. The annoying thing however though was the conversion price was not done based on your specific price but the monthly exchange rate level set by the CRA.
  5. A family member bought $50k of USD at Bank of Montreal the other day and he was told that the money would allow for a tax free gain, but the losses did not allow you to claim them.

    Ask the bank you are at. Maybe its a bit different buying and selling USD denominated assets, but I'm pretty confident the Bank of Montreal knows the tax law.