Again, you must make the difference on US stocks in a Canadian $ account Vs US stocks detained in a US account. For US Stocks detained a Canadian account, the transaction (purchase and sell) money comes/goes from/to the account cash in CDN $, therefore the transaction will be recorded at the Canadian $ value. The T5800 will be issued the financial institution at that value, and there is nothing to do.
For US stock detained in a US account, the cash is in US $ therefore there is no currency conversion happening at the moment of the transaction. Purchase price and selling price are recorded in US value and are indicated on the T5800 at that value. The #13 case on the T5800 will indicate USD as the currency. If I bought a stock at 100$ USD 3 years ago and sold it 120$ USD in the current year, the capital gain is 20$ US there is no way you can trace the original cost in CND $ (the money might ben in the US account for years in differen form Cash or othewr stocs). The 20$ US of capital gain must be converted in CND $ to be included un the in the tax return. With hundreds of sale transactions happening in the year it’s appropriate to use a year average (year average is not the most favorable rate of the year it should be a real appropriate average, so in the end, using an appropriate average should change almost nothing compared to tracking the individual rates of each transaction.
This is the way other tax software (namely Ufile) do, they sum all the 20$ USD reported in the T5800 with a case #13 = USD and convert the total in CND $ using an average year conversion rate in the Tax return (the original T5800 are not messed with). Unless you use a bogus conversion rate, there in no issue of doing so, and with hundreds of transactions that have been reported on T5800, it’s the only practical Way.
Let’s look at what Turbo Tax wants me to do:
- Correct all T5800 transactions to change purchase and sale price to CDN $;
- Or delete all T5800 transaction and replace them with one total entry that I have calculated on the side with a spreadsheet;
In both case there will be a discrepancy between the T5800 submitted electronicky by the financial institution and the tax return, that will likely trigger a revision from the revenue agency every time.
This is why I this is major issue, and I will not use TurboTax anymore if you do not correct this.
The currency conversion gain (that will happen only if you convert US$ back to CDN $) doesn’t have to be reported. It is the same situation as if I open a US$ account in a Canadian bank and deposit 100$ (cost me 120$ CDN), I will receive a T5 for interest on the 100$, but I will not be tax in the event I withdraw and convert back the 100$ and I receive 130$ CDN.
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