Any Suggestions on How to Correct Foreign Exchange Rate Used By Financial Institution for T3 Slip Issued
Received a T3 Slip for a Canadian Based Mutual Fund (Dynamic Power DYN039 held in US$). It was a single distribution transaction, in Dec 2020, in US$ when that day's FX rate per BoC was 1.2856 CDN/US.
However, Dynamic issues the T3 with it already converted to CDN$ and used the Average Annual BoC/CRA exchange rate of 1.3415 for 2020.
As a result the income reported in CDN$ on that T3 slip is approx 4.5% higher than it should be, and, hence tax paid for that is higher than it should be.
I contacted Dynamic Funds and they are unwilling to issue an amended T3 slip (advised them that all other Financial Institutions have used the FX rate for the dates of the transactions).
Curious if anyone has faced a similar situation and what was the remedy or work-around used.
I realize I could enter what I consider the correct CDN$ to report for that T3 entry but that might draw attention by the CRA since it will not match what is on record.
Am hoping there is some other method for making the adjustment/correction.
Determined that one approach to handling this is to use the currency exchange rate used by for the T3 slip for the ongoing Canadian $ ACB (Average Cost Base) calculation for this mutual fund...instead of the exchange rate of the day, which is my usual approach.
This will increase the ACB (in CDN$) by the same amount that I am having to "over report" in my 2020 taxes. Because the single transaction in 2020 associated with the T3 slip was all capital gains the extra capital gains income I am having to report in 2020 will be offset by less capital gains to report (due to the higher ACB) when the fund is eventually sold.
From a Capital Gains calculation (in Canadian $) this is a wash. However, it is slightly disadvantaged from a taxation standpoint in that having to pay slightly more taxes now versus in the future (time value of money) and also not knowing if taxable gains/loss inclusion rates may change (increase) in the future.
Note: the amounts that will show up in a future T5008, when sold, will be is US$ for both Box 20 & 21 as this fund is held in a US$ investment account...the ongoing CDN$ ACB calculation will be used for Box 20 for tax filing.
Further, this approach for selecting the exchange rate is "on record" with the CRA by virtue of the amount included on the T3 slip.
Would still prefer that the Dynamic use the FX rate of the day....it's just computers, spreadsheets & databases and most other mutual fund companies handle it that way.