Gains/Losses on Currency Exchange

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

Moderator: Mark T Serbinski CA CPA

Post Reply
Mswalleye2
Posts: 31
Joined: Fri Oct 12, 2018 2:37 pm

Gains/Losses on Currency Exchange

Post by Mswalleye2 » Fri Mar 22, 2019 3:02 pm

Sold a house in USA, put the money in our US bank account. I am going to move some of this money to Canada via vbce ...

When I move it, if the exchange rate is higher (Can to US) than when we sold the house, I am understanding that the gain in excess of $200 will have to be reported as a capital gain. If the exchange rate is less and there is no reportable gain but a loss ..... can this loss be carried forward to future years or no? If so, how is it reported the year of loss?

thanks

nelsona
Posts: 15980
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Gains/Losses on Currency Exchange

Post by nelsona » Sun Mar 24, 2019 1:12 pm

Only the gains that occur on the change of use of the money to another currency would incur cap gains.
Losses don't count.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

nelsona
Posts: 15980
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Gains/Losses on Currency Exchange

Post by nelsona » Sun Mar 24, 2019 1:19 pm

Losses and gains would be reported on the Cdn cap gains schedule.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

Mswalleye2
Posts: 31
Joined: Fri Oct 12, 2018 2:37 pm

Re: Gains/Losses on Currency Exchange

Post by Mswalleye2 » Sun Mar 24, 2019 9:19 pm

So ... if i exchanged money 5 times in a year, one time is a gain and the other 4 times are losses .... even though the losses exceed the one gain ... I would have to report the gain for the year?

nelsona
Posts: 15980
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Gains/Losses on Currency Exchange

Post by nelsona » Mon Mar 25, 2019 9:55 am

I misspoke earlier, on losses being ignored. I was thinking of another category of capital.
But to address your specific question, currency transactions would be reported once for the year, so you would sum up all your transactions, determine the gain/loss and report the gain in excess of $200, and, any loss in excess of $200
The loss would be available for carryforward/back as normal.

Note that it is not only actual exchanges that are considered. If you take this money and buy a car, other investment, even toothpaste, it is considered a currency transaction from cash to anything else. And ALL your US cash is considered in determining the cost basis.
So while you may be focused on the actual proceeds of your house sale sitting in an account, really any cash you have in all your accounts is considered. Do you know the Cdn value of every US dollar you have in your bank accounts? probably not.

That is why it is probably not worth worrying about these things until you enter Canada and have divested yourself of most of your US cash anyways.
Then the transactions become more manageable.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

Mswalleye2
Posts: 31
Joined: Fri Oct 12, 2018 2:37 pm

Re: Gains/Losses on Currency Exchange

Post by Mswalleye2 » Sat Apr 06, 2019 12:35 am

Thanks for that. Brain farct happening.

Already living in Canada (border town). We have had 2 US accounts since 2013 and 2016 plus one inherited annuity. We use the one account for US pension deposit and day to day expenses (mostly US expenses), house expenses when we were renovating US house etc.. I have been putting money in and out, transfering between accounts in USA - some transfers to Canada. etc. I have not kept track because I was unaware that I needed to, I wasn't keeping the money there for currency speculation. So .... a bit of a wake up here.

If ACB is all of the accounts ... I would need to go back, and calculate for each transaction, exchange rate for day of transaction - add and subtract from original deposit to get up to date ACB in Canadian Funds?

I transferred a lump sum recently thinking my ACB was the value of the money when I received it, you say that this is wrong (total of all $)so .... if it is the total of the 3 accounts ...

Say I have total of $500,000 Canadian in three accounts ...........move $250000 to Canada ..... If I can (but know I can't) compare the exchange rate on the same money the day I received it to the exchange rate the day I transfer it .. I understand the gain or loss but .... if my ACB is as you say total of my 3 different accounts with varying exchange rates but totalling $500,000 Canadian .... what is the ACB?

I read a interpretatin bulletin or two by CRA but it doesn't seem to help me any...

Any light you can shed on this is greatly appreciated.

Post Reply