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?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
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.