Transfer of money - trigger a reportable gain
Moderator: Mark T Serbinski CA CPA
Transfer of money - trigger a reportable gain
I am a dual citizen living in Canada and I have a 100K US money market account in a credit union in the US - which I do report on both sides of the border (including T1135). If I were to transfer some of the money into a certificate of deposit, would this trigger a reportable gain in Canada? Is transferring between such accounts like "selling" and "buying"?
Re: Transfer of money - trigger a reportable gain
A CD, since it is just a high-interest bearing deposit, avoids the triggering of a gain/loss calculation.
This is explained in the last paragraph of IT-95
https://www.canada.ca/en/revenue-agency ... osses.html
But in general, whether you buy toothpaste, a car, stocks, a house, or another currency, anytime you change USD (or any other foreign currency) into anything else, it is a trigger.
However, for there to be a taxable gain (over $200) you need to know the cost basis of that money. THAT is the hard thing to establish. The "proceeds" are at current exchange rate US$1000 = CAD1333, but can you tell me what the Cdn value of that US$100K. Do you know what the Cdn value of every USD that went into that or any other account?
This is explained in the last paragraph of IT-95
https://www.canada.ca/en/revenue-agency ... osses.html
But in general, whether you buy toothpaste, a car, stocks, a house, or another currency, anytime you change USD (or any other foreign currency) into anything else, it is a trigger.
However, for there to be a taxable gain (over $200) you need to know the cost basis of that money. THAT is the hard thing to establish. The "proceeds" are at current exchange rate US$1000 = CAD1333, but can you tell me what the Cdn value of that US$100K. Do you know what the Cdn value of every USD that went into that or any other account?
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Re: Transfer of money - trigger a reportable gain
Sorry Nelsona,
I did’t see your reply until now. I have been keeping track of the ABC calculations in a spreadsheet - the value of my US dollar account converted into Canadian dollars also factoring in added dividends, interest, or money into the account as well as the withdrawals. I use the average annual exchange rate and report the gains on my Cdn returns and file my T1135.
I did’t see your reply until now. I have been keeping track of the ABC calculations in a spreadsheet - the value of my US dollar account converted into Canadian dollars also factoring in added dividends, interest, or money into the account as well as the withdrawals. I use the average annual exchange rate and report the gains on my Cdn returns and file my T1135.