Reporting multiple stocks disposition

[rikahs]

Hi,

I have multiple (greater than 30) number of stocks trades to report. They were traded on US stock exchange.

Where do I report it? on Capial gain/losses section or foreign income? 

Do I convert to $CDN using what foreign exchange rate?

Is there an easier way to enter this large number of trades, or I have to painfully enter one by one in the dialogue boxes?

Does this question in "Capital Gains (or lesses) and ABIL section : "Does this Capital gain result from a disposition of foreign resource property" applies in my case?

 

Thanks

[TheTaxSmith]

Hello rikahs. First off did you get a Summary from a broker or did you do the trading yourself? If done by a broker they should produce a Summary showing your ACB and the Proceeds based on date. If you did the trades yourself and the service you used did not supply a nice summary then you have to create it yourself. I suggest using an Excel spreadsheet. Enter the Date of purchase and Cost followed by the exchange rate on the date you purchased and then calculate the CDN amount. Do the same for the Proceeds using the exchange rate at the date you sold. Then create a total for the Cost and Proceeds at the CDN dollar amount and enter those totals onto the capital gains schedule. Usually that is sufficient and you will have the backup Excel schedule should CRA request it.

Not knowing what you were trading in does not allow an accurate response to your question about resource properties, but I suspect the response would be NO to that.

Now to caution you about doing stock market trades. If you were doing "day trading" CRA might consider you to be doing that on account of income and all gains or losses will be considered income and not capital gains.

[TheTaxSmith]

Yes the data schedule built into the program will do the job but make sure you use the correct exchange rates for the Cost and the Proceeds separately. You should be able to use an exchange rate from a date before the 2020 year by manually entering the rate on each line. The embedded rates are for 2020 only and are monthly averages. You may prefer to use the actual rate for the day the transaction was done. If you paid any Foreign tax you will need to provide the exchange rate as per the Proceeds date.

[techie]

Hi I use  Adjusted Cost Base.  The software allows you to enter the stock purchase/sells and athe athe same time convert US stocks to CDN currency . The exchange rate can be loaded into the SW. It also produces a nice capital gains report which u use to enter on the tax sw . It only  costs about $49/cdn per annum. U can enter each buy/sell trade as they happen. Try it

 

[AltaRed]

I agree with TheTaxSmith on this. Acquisitions and dispositions of securities are converted to CAD at the BoC rate in effect on the day the transaction occurred (actually day of settlement, i.e. T+2) but CRA will accept transaction date if one is consistent year to year. They are NOT based on the annual average forex rate, i.e. 1.3415.  The annual average forex rate IS used for 'recurring income', i.e. distributions and dividends received and tax withheld.

The simplest way to think of this is that anything that goes on Schedule 3 (T5008 data) is based on forex in effect on day of transaction, and anything that is included as Investment Income on a T3 or T5 tax slip is based on the annual forex rate.

It is problematic for frequent traders to use forex in effect on the date of the transaction because of the record keeping involved. I suppose it might be easier to use monthly rates and CRA will accept that.  Techie has the real solution here. Use Adjusted Cost Base at https://www.adjustedcostbase.ca/ to keep track of one's ACB.  Better yet: Stop doing frequent trading especially in foreign markets.

 

[TheTaxSmith]

Hey there AltaRed. Nice post, particularly the last line, LOL.

I reviewed that site and it could help with one situation that people are not familiar with. This is respect to purchasing a foreign property such as a vacation home in the US. Many Canadians will obtain a mortgage to do that, and commonly that mortgage could be held with a US institution in US dollars. To determine the ACB of the property most people will use the purchase price converted on the day they buy and never consider the fact that they are actually purchasing over time with a fluctuation in currency. The correct ACB for the property needs to convert the actual funds paid on the date of payment. So the down payment gets converted on day one while the principal portions of the mortgage payments get converted on the date of each payment.

That ACB calculator might help people capture the correct ACB for their property which will ultimately be needed down the road.   

[Chris Manotick]

I posted yesterday that the software was not correctly applying a foreign exchange rate entered for a T5.  Turns out I was incorrect, so I have deleted what I had previously said.

 

Edited April 23, 2021 by Chris Manotick
Delete earlier post content - was incorrect