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Capital Gain on stock and forex
October 12, 2024
9:09 am
daipok
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Many years ago around 2005, I exchanged CAD and put to my USD trading account to purchase some stocks.

The stock rose a lot after these many years, and I need the money so I sold some of them.

For sure this incurs a capital gain (and T5008), and it's in my consideration.

However, when I exchanged this USD to CAD (I have trading accts in the same institution for two currencies) for pulling it out to my other bank, I know there is a forex gain as well (these many years of change between usd and cad). Is this forex gain considered a capital gain? Will T5008 be triggered or I need to do my own calculation? How is the calculation done?

For example if in the beginning it's $5000 cad exchanged to $5000 usd (back then it's 1:1 almost), and over the years the $5000 becomes 5X more, and all got sold. How is forex gain calculated?

If there is a group that fits my question better let me know so I can post there?

October 12, 2024
11:23 am
Norman1
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There was forex capital gains

  1. when the US$ were used to pay for the stocks,
  2. when the stocks were sold (with both proceeds and ACB reported in C$), and
  3. when the US$ from selling the stocks were exchanged to C$.

Details are in previous discussion Taxation of USD Brokerage Investment Savings Accounts.

October 12, 2024
11:46 am
mordko
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Personally I record all USD stock transactions in CAD at daily exchange rate when tracking ACB. For me its the simplest way of handling this. Exchange itself is done using NG, which also involves tracking ACB to record potential gains.

You can use average exchange rates for 2005 and 2024. As long as you are consistent in the way you are treating your purchases and sales of USD, all is good.

The topic is more suited to https://www.financialwisdomforum.org/forum/search.php?search_id=active_topics. FWF covers stock trading within its scope while this forum is focused on HISA.

October 12, 2024
7:54 pm
Norman1
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CRA does not accept average exchange rates for capital acquistions and dispositions that are not frequent and regular.

CRA was asked and replied that four conditions need to be met for average exchange rates to be acceptable. Consistent use of average rates is only one of the four conditions. The other three are unlikely to be met by sporadic stock purchases or sales.

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