Are unrealized foreign exchange gains and losses taxable?

Exchange rate gains/losses?

I just read today that foreign exchange gains/losses are taxable. I've converted CAD to USD and invested in USD stocks for many years but never reported the foreign exchange gains/losses beyond converting the value of each USD trade into CAD using B.O.C. rate at the time. Most of the money are still in USD. How should I account for foreign exchange gains/losses for tax-purporses in this case?
Answer:

You have been accounting for your trades correctly. If most of your money remains in USD, you will not have to account for any foreign exchange gains or losses until the money is exchanged. You can refer to the CRA's website for the foreign exchange rates of each tax year.

Allan Accountant at Yahoo! Answers Visit the source

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Other answers

Foreign exchange gains/losses are considered capital gains & losses. Since you've already recorded the foreign exchange gains/losses as capital gains/losses when you reported your capital gains/losses on your investments, there is no reporting issue. The distinction would be relevant if the good being valued in foreign currency was on an income account (such as inventory). This would be relevant if you were ever considered a trader in securities, in which case the stocks would be considered inventory.

David

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