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Reporting Foreign Transactions on Your Tax Return

Foreign Amounts Must Be Reported In Canadian Dollars

Reporting Investment Dispositions on Schedule 3 of the Tax Return

Foreign Amounts on the T5008 and Brokerage Statements

Deemed Dispositions Might Not be on the T5008

T5008 Exchange Rates and Accuracy

Line 12100 Investment Income

Converting Foreign Amounts to Canadian Dollars

Using an Average Exchange Rate

2023 US Exchange Average Rate

Tax Tips

Reporting Foreign Assets Owned

TaxTips.ca Resources

Exchange Rate Resources

Canada Revenue Agency (CRA) Resources

Foreign Amounts Must Be Reported in Canadian Dollars

When foreign amounts, including purchases and sales, income, expenses, and foreign taxes paid, are reported on your Canadian personal or corporate income tax return, they must be reported in Canadian dollars.

Reporting Investment Dispositions on Schedule 3 of the Tax Return

Sales of investments are reported on Schedule 3 of the personal tax return, in Canadian dollars, with proceeds of disposition using the exchange rate at the time of sale. The adjusted cost base (ACB) of the sold investment is also recorded in Canadian dollars, using the exchange rate from the date the investment was purchased.

If you have non-registered investments held in US$, it's very important to keep accurate records of the date the investments were purchased, and the exchange rate on that date, to calculate your Canadian dollar ACB.

Foreign Amounts on the T5008 and Brokerage Statements

Your US$ brokerage statements will show you the US$ ACB of your investments, but will not show you the Cdn$ ACB.

The T5008 and Trading Summary provided by your brokerage will show the US$ proceeds and cost, but you must convert these amounts to Cdn$ using the exchange rate from the sale and purchase dates. Note that the T5008 proceeds may not be net of commission (commission may be shown separately), but the Trading Summary shows the net proceeds after commission is deducted.

Deemed Dispositions Might Not be on the T5008

Note that in kind transfers from your non-registered account may not be on the T5008 or Trading Summary, because they are not required to be reported, but they must be reported as a disposal on your Schedule 3 if the transfer was to your registered account, or to someone else's account. If you use a professional tax preparer, you must provide this information to them. Also, note that the T5008 proceeds are before commission and US SEC fees are deducted. Your trading summary will show the proceeds net of both of these.

T5008 Exchange Rates and Accuracy

The T5008 produced by TD Direct Investing:

Shows the currency used (USD or CAD) in the top right-hand corner.

Prior to 2020, showed US$ account trades in US$, and did not show in kind transfers

Shows the proceeds of disposition before deducting commission and US SEC fees, but the trading summary shows the proceeds after deducting both of these.

In 2020 reported US$ account trades in Cdn$ - but this was only for in kind transfers that went through the US$ account, and they were shown on the T5008 for the Cdn$ account.

	using the exchange rate for the date of the sale (which is what we also use) for the proceeds of disposition.
	using the same exchange rate for the adjusted cost basis as for the sale - this is not the correct Cdn$ ACB, so you'll have to calculate the ACB in Canadian$ yourself, using the transaction date of the purchase of the investment.

In 2021 reported US$ account trades in US$, even in kind transfers, but did not include all US$ in kind dispositions. 2 of the US$ in kind dispositions were reported on the Cdn$ T5008, in Cdn$, with an incorrect Cdn$ ACB. Note that your T5008 states that box 20 "may or may not reflect your adjusted cost base (ACB) for the purpose of determining the gain or loss from the disposition of the security."

It is quite likely that your T5008 for trades in a US$ account will be in US$. The point of this is that you must check your T5008, make sure you know the currency it is using, and make sure it includes all dispositions. You will have to do the calculation to convert US$ ACBs to Cdn$ yourself.

Tax Tips:

A T5008 which shows US$ amounts in Cdn$ will probably not have the correct Cdn$ ACB for US$ investments.

Always check the T5008 proceeds and ACB to your own records!!

Line 12100 Investment Income

Investment income is reported on Line 12100 (line 121 prior to 2019) of the personal tax return. If you are using a software package to do your tax return, record the information from your tax slips in the tax slips area of the return. The amounts on your tax slip may not be in Canadian dollars. If they are not, you have to convert the amounts and enter the Canadian dollar amounts into the tax return.

When you record the amounts from your tax slips using personal income tax software, any foreign withholding tax will automatically be entered into the areas for calculating the federal and provincial foreign tax credits. The federal foreign tax credit is calculated on Schedule T2209, and at least a portion of it should reduce your taxes payable. The provincial or territorial foreign tax credit is calculated on Schedule T2036. See the foreign tax credit article for how to deduct the amount not recovered by the foreign tax credit.

Converting Foreign Amounts to Canadian Dollars

The foreign exchange rate used to convert the foreign currency transaction into Canadian dollars is either

	the rate in effect on the date of the transaction, or
	the average annual exchange rate for the taxation year

as quoted by the Bank of Canada on the particular day or on the closest preceding day for which a spot rate is quoted, as per the definition of "relevant spot rate" in s. 261(1) of the Income Tax Act.

When assets, including investments, are purchased or sold, the exchange rate in effect on the date of the transaction should be used. Dividends received throughout the year can be converted at either the transaction date rate or the average annual exchange rate for the taxation year, but the method used should be consistent from year to year.

The Income Tax Act says to use the relevant spot rate for the day on which the particular amount arose, for converting to Cdn$. Whether you use the settlement date rate or the trade date rate, you should be consistent in doing this for all purchases and disposals in every year. Regardless of which date is used for the exchange conversion, the settlement date is the date of acquisition or disposition.

CRA previously indicated in their information on Line 12700 capital gains (this is the old web page from September 26, 2022, from archive.org) that the exchange rate or annual average exchange rate in effect at the time of the sale could be used when converting the proceeds of disposition (not cost of purchases) to Canadian dollars. This information has now been removed from their information on Line 12700 capital gains, so do not use the average rate for converting proceeds.

If any income or expense that you have received or paid was converted to Canadian dollars as part of the transaction, then the Canadian dollar amount that you actually received or paid would be reported as your income or expense. For example:

	If you have paid tax-deductible expenses by using your credit card, which converts the amounts into Canadian dollars, you would use the Canadian $ amount that you actually paid.
	If your foreign dividends are received in a Canadian$ account, so that they are converted automatically, the the amount you would report as a dividend is the Canadian $ amount that you actually received.
	If your foreign shares are owned in a Canadian$ account, or if funds were transferred from a Canadian$ account to the US$ account to fund the purchase, the cost of purchases and the proceeds of disposition would be the actual Canadian dollar amount that you paid or received.

Using an Average Exchange Rate

As noted in paragraph 1.6.1 of Income Tax Folio S5-F4-C1, Income Tax Reporting Currency (link below), CRA may accept the use of an average of exchange rates over a period of time in order to convert certain income items. Income items would include interest, dividends and other income items, but not capital purchases/sales of securities.

2023 US Exchange Average Rate

The annual average rate for converting US dollars for 2023, as per the Bank of Canada, was 1.3497 (1.3013 for 2022). To convert US dollar income/dividend amounts to Canadian dollars for 2023, multiply the US$ amount by 1.3497.

See our table of historical US$ average annual exchange rates, which also provides links to exchange rate lookup sites.

The exchange rates for years up to and including April 28, 2017 are now considered "legacy" rates by the Bank of Canada, and the noon, closing, monthly average and annual average rates can be downloaded from the Bank of Canada Historical Noon and Closing Rates.

Tax Tips:

Investment purchases use transaction date rate for adjusted cost base.

Investment sales use the transaction date rate for proceeds of disposition.

Dividends can use average annual rate or transaction date rate - be consistent from year to year!

Your US$ brokerage statements will show you the US$ ACB of your investments, but will not show you the Cdn$ ACB. That calculation is your responsibility.

In kind transfers out of your non-registered account may not be on the T5008 or Trading Summary, but must be reported on your Schedule 3.

Proceeds on T5008 might not be net of any commission paid, but if not, commission may be shown separately. The trading summary will have proceeds net of commission. Always check to your own records to ensure you report the correct amounts.

You may be able to recover some of the foreign tax paid, by claiming a foreign tax credit.

Reporting Foreign Assets Owned

If you own foreign assets with a cost basis exceeding $100,000 Canadian at any time in the year, this must be reported on the T1135, foreign asset verification statement. This form must be filed by Canadian resident individuals, corporations and trusts, as well as many partnerships. See our article on Reporting Foreign Assets Owned on the T1135 Form.

Revised: December 31, 2023