Are unrealized foreign exchange gains and losses taxable?

Canada - tax on foreign exchange gains?

• Hi does anyone know what dates are used for calculating gains on foreign exchange for tax purposes ?? I'll be returning to canada next year after some time away but don't want to bring all my money because of the poor exchange rates. If i leave it in the UK for 3 years, assuming the rate improves in my favour, what dates are used to work out the tax payable. is it the exchange rate on the day i become resident in canada again, or is it the exchange rate at the start of the tax year when i move the money ? if it makes any difference the money is the result of selling my principle residence in the UK (i saw a reference that it does but i'm till struggling to get the facts) thanks for any help

• Answer:

  Calculations for Canadian capital gain are made in Canadian dollars. The purchase price and sale price are converted on the day they occur, not the day you move the money from one country to another. Unless you trade currency for a living, there is no "conversion" from one currency to another on the movement of CAPITAL. Income taxes are just that: a tax on income. The conversion to Canadian dollars occurs when the income is earned, or the capital gain is realized. If you truly were not a Canadian resident on the day your residence was sold, there is NO capital gain in the eyes of Canada. If you maintaned ties with Canada (family, bank accounts, real estate, drivers licence, etc...) during the 3 years absence, you were still considered a Canadian resident the entire time, especially if you were not a legal permanent resident in the UK (i.e. not ILR). http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html?=slnk