CRA USD Annual Avg Exchange Rate for 2012 is 1.000!

nquery · Post by **nquery** » Sun Mar 10, 2013 5:52 pm

Thought this is interesting and will make life easy for Canadian taxes ...

According to the CRA, one can choose to use the Bank of canada average annual exchange rate, which for 2012 happens to be 0.99958 for the USD according to their website. (http://www.bankofcanada.ca/stats/assets ... a-2012.pdf).

Now, I am sure that one can round this to 3 decimal places, which is 1.000, which means that one doesn't have to do any tedious math on their Canadian return this year ;) I can't see how the CRA could bust anyone's chops for rounding to 3 decimal places ...

Oddly enough, the IRS official rate for 2012 is 1 USD = 1.04 Canadian. (http://www.irs.gov/Individuals/Internat ... ange-Rates)

Amazing that there is such a discrepancy between the 2. Would have to been nice to be able to use 1.000 on the US side as well.

Diskdoctor · Post by **Diskdoctor** » Mon Mar 11, 2013 9:28 am

From the site you linked "The Internal Revenue Service has no official exchange rate. Generally, it accepts any posted exchange rate that is used consistently."

nquery · Post by **nquery** » Mon Mar 11, 2013 11:46 am

Fair enough. Given that they do provide a chart of average annual rates in the next subsection, I guess one has the choice to use what they list or something else reasonable. Unless that statement was only referring to daily exchange rate sources, which is unclear. It is tempting to use the BoC annual rate on the IRS forms and avoid any conversions there as well ...

lanman2000 · Post by **lanman2000** » Mon Mar 11, 2013 4:01 pm

FWIW, I'm just using the BOC rate of 1:1 for both my canadian and US returns this year. It is just going to make things simpler...

nquery · Post by **nquery** » Mon Mar 11, 2013 4:08 pm

Yep.

Note that the IRS refers to the federal reserve site as well, and they show different averages vs the IRS page ... http://www.federalreserve.gov/releases/ ... efault.htm

Fortunately, the federal reserve said the annual rate was also 0.9995 and was available since Jan 2 whereas the IRS just updated their page with 2012 numbers very very recently.

So I too am going with 1 to 1 and no CAD - USD conversions on the assumption that no one is going to argue with rounding 0.9995 to 1.000 (the IRS rounds to 2 or 3 decimal places on the yearly avg rate page so I can as well).

nelsona · Post by **nelsona** » Mon Mar 11, 2013 5:24 pm

Be aware that IRS prefers transaction-based exchage rate, rather than yearly averages.

For example, your year-end 8891 RRSP value better be based on the dec 31 exchange rate, regadless of what the average was.