Which rate do I use when reporting a foreign exchange gain or loss?

[bob2731]

When I converted my foreign currency to Canadian dollars, I had a reportable capital loss (i.e. greater than $200), and I'm wondering which exchange rate do I use. Here's a scenario similar to the one I need to capture in TurboTax Premier:

- I received a 10,000 GBP lump sum from a UK RRSP/Personal Pension.

- On the day the funds went into my GBP account, the BoC GBP-CAD exchange rate was 1.70.

- The amount of foreign income received will be reported in my tax return as 10,000 with an exchange rate of  1.70.

- Some months later, I withdrew the funds in CAD. The BoC exchange rate on that day was 1.6, but the bank/broker used an exchange rate of 1.55.

- If I use the BoC exchange rate, my reported loss would be: $1,000 (10,000 x 1.7 - 10,000 x 1.6), however, my actual loss is $1,500 (10,000 x 1.7 - 10,000 x 1.55).

When entering the information into TurboTax to report the capital loss, do I use the BoC exchange rate for the GBP-CAD conversion, or do I use the actual bank/broker exchange rate? And, if I must use the BoC rate, can I claim the difference I received (i.e., $500) in the Outlays and Expenses box?

[TurboTaxGinette]

Please see our TurboTax FAQ for information about this: How do I report foreign income, pension, and other foreign amounts?

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