My question is: Canadian-specific
QUESTION: I have been living in Bermuda for over 5 years and will soon be
returning to Canada. Due to the poor USD/Cdn $ exchange rate at the current
time I would like to keep a portion of my savings in US dollars (I am paid
in US dollars) and open a US dollar account upon returning to Canada. Is
there any tax implications by doing this- (I know with other foreign
property the deemed disposition rule applies, so I would keep track of the
MV of all assets upon entering Canada, then when I sell them I am taxed on
any gains in the market movement). Would holding US dollars be the same- if
I convert them while in Canada once the rate is more favourable will I be
taxed on the foreign exchange gain??
many thanks!!!
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david ingram replies:
Foreign exchange profits are usually taxable as straight income.
The reaon is that the only way to "make" money is inbt he difference in the
sale price. It is not like a work of art where you own it to look at. In
the case of a long term holding of a work of art, it is a capital gain. A
dividend bearing stock sale is also usually a capital gain or a capital
loss.
However, speculation in futures or currency is considered a venture in the
nature of trade and any profits are considered taxable and any losses are a
deduction against other income.
Is everyone leaving Bermuda? I have about a dozen ex Bermuda residents in
some sort of process at the moment.
Hope this helps
David Ingram of the CEN-TA Group
US / Canada / Mexico tax and working Visa Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 913-9133 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
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