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Singing101
New Member

Reporting gain/loss on purchasing US ETFs

Do i need to report gain/loss in the follwing situation

- converted CAD to USD at exchange rate #1
- next week purchased US ETF using my USD. The broker reports the value in USD ( original) and its equivalent in CAD ( based on the exchange rate on the transaction date)
- there is difference between the initial conversion rate that the one on the settlement day ( and theoretical gain/ loss in CAD).
- if i keep this ETF without selling , do I need to report this as gain/loss ?
- if yes, do i just manually add it to 5008 form  within TurboTax) ; is it under " investment" ( as there was not actual gain/ loss).
Thanks in advance
Thanks
 

 

1 Reply
Antomeister
Level 3

Reporting gain/loss on purchasing US ETFs

You have actually opened 2 financial positions so far. You have converted CAD to USD, and you have converted USD to a security. At some point in the future, you will have to sell the security for USD, and furthermore, will possibly want to turn your USD into CAD (Although you may change your mind). You do not have to report any gain/loss so far. This is because, your financial positions are still open, and cannot be taxed because they are fluctuating by the second. Say you do sell your US ETF, you will have to report your security and it's associated Capital Gain/Loss. Furthermore, after receiving proceeds in USD, if you convert it to CAD and made profit on the exchange rate from your first conversion, you will have to report this as well - Only if it's a substantial amount. A substantial amount from the viewpoint of the Canada Revenue Agency (CRA), is anything more than $200 net profit/loss on the transaction. So, to summarize:

> You do not have to report anything right now.

> When you sell your US ETF, you will report the capital gain/loss.

> If you convert your USD proceeds into CAD and made/lost more than $200, this capital transaction will also have to be reported.

 

For more information, check out: CRA - Foreign Currencies

and, CRA - Reporting Capital Gain/Loss

 

Thank you for choosing TurboTax.

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