Exchange gain loss on cash accounts

For Canadian taxes I need to report the gain or loss I made on the cash in a trading account as capital gain loss.

The normal way to do that is to take the Canadian $ balance as at the year end, which will be based on the exchange rate of all of the in and outflows as at their date and then adjust that balance to the exchange rate of the original currency as at the last day of the year.

The difference between the two numbers is the capital gain or loss.

So, the key question is can I adjust the Canadian dollar balance, without changing the original balance.

And further, is the Canadian dollar value of a non Canadian cash account shown as the aggregated balance of the exchange rate as at the day of a flow, or just at the exchange date on the day of report?

Alternatively, do you provide a gain loss report on cash accounts held in other than the home. currency.
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  • Hi John,

    Unfortunately Sharesight doesn't provide any currency gain reporting on cash accounts at this stage. The value of the cash account is simply converted to your local currency based on the exchange rate on the report end date (or the current rate in the case of the portfolio overview page).

    You might like to take a look at Xero (www.xero.com) which handles this really nicely (including automated bank statement feeds) and integrates with Sharesight for the best of both worlds (https://www.sharesight.com/xero/). Note that you will require a multi-currency Xero subscription in order maintain a foreign currency bank account.
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  • Hi Scott,

    Thanks for the quick reply. I would like to avoid going to a full on accounting package just for this.

    Idea: how about I treated US cash like any other custom security. Price would always be $US1.00, deposit would be a buy, withdrawal a sale. For each cash flow the system would record a Can $ value using the automated exchange rate feature.

    Then the system would report the exchange profit on this "security" which I would report as a capital gain to CRA. (Gains on cash used for investing are classed as capital gains in Canada.)

    Done and dusted, or am I missing some gotche?

    Also, I'm thinking that I could do an auto input of a CSV file from BMO of my cash transactions, so this would really be little work?

    Please advise.
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  • Hi Scott,

    I never got an answer to my follow up question?
    • Hi John,

      Apologies for missing your earlier question. It is certainly possible to track foreign currency as a regular 'holding' in Sharesight. You don't even need to create a custom security for this as you can simply enter the currency code into the instrument search on the add holding form and select the appropriate entry (eg FX:USD). There is some more information about this here: https://help.sharesight.com/track-for...

      Note however that Sharesight's performance calculation engine is not designed to handle large transaction volumes of the type that you would expect to find in a transaction account. The calculation will become slow across several hundred trades/transactions and we currently have a limit of 1000 trades per holding.

      Recording an FX holding is designed for tracking a cash investment such as a term deposit, or lump sum foreign currency investment, whereas the cash account feature is better suited for brokerage accounts with higher transaction volumes.

      We will certainly give some consideration to developing a currency gain calculation for cash accounts as described in your original post. I assume that it would be sufficient for tax purposes to calculate the CAD value of each cash flow based on end of day reference rates?
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  • Hi Scott,

    Thanks for coming back on that.

    That idea may work, I will experiment with it. We don't have a huge number of trans in a year, so I don't think it will be too slow.

    Going forward, it would be good to add this to the cash accounts since any Canadian tax payer (and I suspect most anywhere) must report capital gains/losses on investment account cash balances.

    Here's a good resource on that from a guy who is the guru of all things investment tax reporting in Canada: https://www.adjustedcostbase.ca/blog/...

    The other thing we Canadians need is auto update of return of capital etc for Canadian based ETFs since without that the ACB is wrong.

    Adjusted Cost Base.ca handles both of these issues, so I will continue to use it, rather than Sharesight, but this means duel data entry, so it would be great if you could implement these features.
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