USD/CAD currency exchange between cross-border relatives?

daboomer · Post by **daboomer** » Wed Apr 04, 2018 5:28 pm

Hi,

I am in Canada and a Canadian Citizen, and I have some USD. An American relative across the border in the US has CAD.

If I wanted to exchange a large amount (say $100K USD for an equivalent amount in CAD) between the two of us, what are the CRA-IRS reporting / tax implications for each person in the exchange?

Can capital gains/losses be ignored, since no bank or institution is used to convert the amounts, since we simply swap equivalent amounts?

Thanks.

fink08 · Post by **fink08** » Thu Apr 05, 2018 12:05 am

You can't 'ignore' gains. But it sounds like you mean that your cousin Bob has 78k USD, and you have 100k CAD, and you swap it (i.e., equivalent means "according to the daily posted exchange rate"). Then there are no gains either way.

If you really mean cousin Bob has 100k USD and you swap it at par, then obviously you have done very well and will have to declare a gift or gain of some kind.

Transferring that much cash will also likely raise flags at FINTRACK and other agencies.

An easier approach is to register with an FX broker like Interactive Brokers, and use your CAD to buy USD. They charge very little in the way of fees and it sounds much simpler to me.

nelsona · Post by **nelsona** » Thu Apr 05, 2018 12:11 am

For there to be a gain, you would need to know how much your paid, in CAD for your USD.

And he would have to know what he paid for his CAD, in USD.

Then each of you would determine the gains or losses made in the transaction (you in CAD, him in USD) and report the gain on your respective returns.

Since this is not a gift, he would have nothing to report to IRS in terms of foreign assts or gift, and you would not have anything to report in terms of foreign assets.