Markicof

First tax return time...

CRA website states below.

As we moved here post Brexit in Sept it works out a lot better using the rate in effect on the day I received the income. However it is monthly wages and paid a various times in the year so I am unsure if I then must use the annual rate.

Has anyone had any experience of which exchange rate to use?

Many Thanks

Mark

bats

I use the exchange rate used by my bank at the time of the payment. I just list the monthly payments in dollars add it up and that goes in my tax thingy.

BristolUK

Sometimes the software I have used wanted the exchange rate instead of the $$ amount and on those occasions I took the average exchange rate at the time of payment.

I keep a spreadsheet with the monthly payments and I have a column for the rate.

XE.com will give rates on past dates.

(wouldn't be surprised if CRA wanted Bank of Canada rates though, not that there's likely much difference)

JonboyE

It is OK to use the actual rates of the days you received the income. Keep records.

Rontel

When doing my taxes I use the Bank of Canada 10 year converter page and plug in the date but I notice this message on their site so as mentioned perhaps keep records as you go.

10-Year Currency Converter
IMPORTANT NOTICE: After 28 April 2017 the rates on this page will no longer be updated
As of 1 March 2017 the Bank of Canada began publishing new exchange rates for 26 currencies.
Until 28 April 2017, the rates on this page will be updated to allow users time to make any necessary adjustments.

Davita

I just did my 2016 tax return and as usual used ufile and their connection to CRA who said to use Bank of Canada for average exchange rate for the year...but I couldn't find they provide that facility, as Rontel has posted.
It wasn't a lot of money so I just made one up and it was accepted.

BristolUK

It appears CRA accepts everything.

I imagine there are 'triggers' that may prompt a more thorough check. Certain aspects like a change in marital status in the year, a period of non residency, high or unusual expenses, and maybe a purely random selection. Just guessing those.

In an entirely unrelated situation a few years ago I had reason to convert my UK civil service pension using Bank of Canada rates and there really was little difference to what I was actually getting via my bank.

not2old

CRA also use the average rate for the calendar year, so if it's possible to find ' the average FX rate'

edit: as below

http://www.bankofcanada.ca/rates/exc...xchange-rates/

Rontel

This is the link to the 10 year converter:

10-Year Currency Converter - Bank of Canada

Granma Nessie

I did my tax return this year and used the Bank of Canada average annual exchange rate of 1.79 . However I actually did not get anything like this rate when I transferred my pensions over in October using Canadian Forces. It was only about 1.65.
I get my British Old Age pension paid in weekly and my private pension monthly into my UK bank account and usually I bring them over to my Canadian Bank account every three months using the FX company but last year because of the Brexit referendum I delayed to after the result and hence got a poor exchange rate . I feel I may be better off this year using the daily rates but which day rate would I use? Is it the day my pension gets paid into my British Bank account or is it the day it arrives in my Canadian account.
I used Simple Tax this year for the first time and was very pleased with it but what would I put next year when it asks for average exchange rate? Could I just leave that part blank?

Many thanks
Granma Nessie

BristolUK

I get a monthly pension on the 6th and a quarterly one about the 25th.
My spreadsheet is set up for Jan to Dec down the first column and the amount received in £ in the next. Every third line the amount in £ increases for the addition of the quarterly payment but I just use the exchange rate as it is on the 6th and I don't do it again for the quarterly one. It's only a small one anyway. I record the rate in another column.

In the last column is the value in $ for each month which is really just for me.

Both amounts are paid into my UK account. I could withdraw the money on the 6th or I could transfer it on the 6th. Or I could choose to have it paid direct to an account here. So it seems fair to use the rate on the 6th as that's the day I could get it.

I was using TurboTax until last year and on theirs I had to input the total received in £ and then the average rate - which was the total of all the rates on the 6th divided by 12.

This year I too used SimpleTax and I input the result of the total in ££ x the average rate. So in $$.
(you'd think it would be the same figure as the total of the monthly $$ but it's not )

You could do one for each and input two sets of figures next time or combine it similarly. Maybe any UK taxes make one method better than the other?

Or perhaps just a running total and then use the average rate as mentioned.

Granma Nessie

Thanks , Bristol, for your info. However I am worried that if I used the Bank of Canada rate on day it went into British Bank and then that rate increased on the date I transferred the money to Canadian bank ,a capital gains tax would be involved.
Perhaps we need Jonboy's advice on this

Aviator

It is not an option. You should use the FX on the day you get the funds. CRA use the BOC rate when valuing foreign assets. Whatever you use, if CRA don't agree, you could get reassessed anyway.

If you obtain the funds one day and do the FX within a few days, then just use the rate you get on the exchange.

If holding the currency for the rate to improve, so you get more money, this is a gain and you trigger a CGT liability.

Granma Nessie

Hi Aviator, yes I thought it would be the Bank of Canada rate on the actual date I bring the money over to Canada that I would use rather than the rate on day it went into UK account.
Do not want to incur any CGT costs

Aviator

Not quite. If the money goes into your UK account on say Monday, you do the fx on the following weds, so within a day or two, the actual rate you get is what you would use, not the BOC rate. This would assume marginal differences in the actual CAD you got. If the sum is particularity large, there could be CGT to pay.

If you bring the money over on one day, then wait a few weeks, or months before bringing the money over to Canada. The BOC rate on the day the money goes into your UK account sets the base value, you do the FX some weeks later and get a better rate than the day the money went into your UK account, you get more CAD. There would be a CGT liability in Canada on the difference between when the money went into the UK account and the actual rate achieved.

Get professional advice from someone who knows your financial circumstances.