American fees received by Canadian resident Ask an

If I receive a "fee" from a U.S. company for services
in American =
Dollars, when do I do the "conversion to Canadian
dollars" in declaring =
it as income in Canada?  If the fee came in on January
2nd next year to =
me and I opened up a new bank account in the U.S. to
deposit it (but not =
actually spend it for several months or longer), how do
I convert the =
currency for income tax purposes? Is there any
advantage in putting this =
money in a U.S. Bank over my normal Canadian bank
david ingram replies:
If you perform the work in Canada, the fee is not
taxable in the USA.
Unless you are set up on an accrual basis where you
would owe tax to Canada when you issue the invoice
(paid or not), you will have to pay tax to Canada on
the day you receive the money in a redeemable manner.
Therefore, if you receive a check (cheque) on Jan 2,
2005, it will be taxable to you on your 2005 Canadian
tax return.  Since it is a Fee, it will be part of
self-employment and should be reported as part of forms
T2124 (business income - line 235) or T2032
(professional or commission income - line 237).  This
means that if you have not paid maximum CPP
contributions, you will owe self-employed CPP
contributions on the fee as well.
The money reported to Canada would usually be at the
exchange rate the day you received it. If there is a
major currency fluxuation between the date you receive
the fee and the date you patriate it to Canada, the
difference would be a capital gain or a capital loss.
There is no advantage in having the money in a US BANK
unless you are intending to do some sort of business in
the area that your American Bank is operating in which
case a local bank with money in it would be a real
If you want to touch on this by phone, it would be a
good question for Fred Snyder's CKBD show "It's Your
Money" which I co-host on Sunday mornings.
Answers to this and other similar  questions can be
obtained free on Air every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, Fred
Snyder of Dundee Wealth Management and I, David Ingram
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