Foreign-Currency Income and Assets: How to Convert to Canadian Dollars

The annual average exchange rate and the exchange rate on the day of the transaction, sources the CRA accepts

Scott Tang, CPAUpdated 2026-11-052026 rules5 min read

When you file taxes in Canada, every amount has to be in Canadian dollars. Rent in RMB, dividends in Hong Kong dollars, interest in US dollars — all of it has to be converted. Which exchange rate to use and when to convert may look like small details, but when you sell property or shares, the effect of the exchange rate can be bigger than the change in price itself.

Bank of Canada

The CRA generally accepts the exchange rates published by the Bank of Canada

Annual average

Income received throughout the year can be converted at the annual average exchange rate

Day of the transaction

When you buy or sell an asset, use the exchange rate on the day of each transaction

$200

When an individual disposes of foreign currency itself, the first $200 of net foreign exchange gain or loss for the year is not counted

Two exchange rates and when to use each

Item	Annual average exchange rate	Exchange rate on the day of the transaction
What it suits	Income received throughout the year: monthly rent, wages, interest, dividends	One-off transactions: buying or selling a home, buying or selling shares, receiving a large sum
How to use it	Total income for the year × annual average exchange rate	Convert each transaction at the rate on the day it happens
Foreign tax	Use the same rate as for the related income	Use the same rate as for the related income

The CRA generally accepts Bank of Canada exchange rates. Other reliable sources can also be used, but they must be consistent and reasonable — you can't pick whichever rate gives the better result. If your circumstances change and you need to adjust, keep a note explaining why.

When you sell an asset, convert the cost and the selling price separately

Capital gain = selling price (converted to Canadian dollars at the exchange rate on the day you sell) − cost (converted to Canadian dollars at the exchange rate on the day you bought). For assets a newcomer already owned before landing, cost = the fair market value on the day you landed × the exchange rate on that day.

A simplified example (the exchange rates are hypothetical and only illustrate the calculation):

In RMB

Market value on landing

RMB 3 million

Selling price

RMB 3.1 million

Gain of RMB 100,000

In RMB, the value rose by only a little over 3%

In Canadian dollars

On landing

RMB 3 million ÷ 5.2 = C$576,923

On sale

RMB 3.1 million ÷ 5.1 = C$607,843

Capital gain of C$30,920

More than 50% higher than converting RMB 100,000 directly (about C$19,600) — the difference comes from the RMB rising against the Canadian dollar

If the exchange rate moves the other way, you can make money in RMB but show a loss in Canadian dollars. So work it out in Canadian dollars before you sell.

Foreign-currency deposits have their own exchange gains and losses

Converting can create a gain
When you convert US-dollar or Hong Kong-dollar deposits back into Canadian dollars (or into another currency to spend), if the exchange rate has changed since you deposited the money, you have a foreign exchange gain or loss.
The first $200 of the year's net amount doesn't count
This applies only when an individual disposes of foreign currency itself (such as foreign-currency deposits), and is based on the net foreign exchange gain or loss for the whole year; only the part above $200 counts as a capital gain or loss. It is not $200 per transaction or per currency, and it doesn't apply to gains on foreign shares.
Keep records
Keep the dates and amounts of large deposits and currency conversions, so the cost can be worked out later.

Points to watch

Be consistent
Once you choose a source and method for exchange rates, you generally keep using them year after year — you can't pick whichever is more favourable.
Same rate for income and tax
When claiming the foreign tax credit, convert the income and the tax paid abroad at the same exchange rate.
Your landing day matters
The Canadian-dollar cost of a newcomer's assets is set by the fair market value and the exchange rate on the day you became a resident; see "Assets You Own Before Arriving: Your Cost Base Is Their Value on the Day You Land" in the Changing Tax Residency series.

How Sheng Qian CPA can help

A conversion table
Using exchange rates the CRA accepts, we convert your foreign-currency income, foreign tax and asset costs into Canadian dollars, using the same method each year.
Calculate before you sell
Before you sell a home in China or Hong Kong shares, we work out the capital gain and the tax in Canadian dollars, and then you decide on the timing.
Numbers on file
The basis for each conversion is kept on file together with the original documents; for fees, see "What Sheng Qian CPA Can Do for Cross-Border Families: From Tax Returns to Foreign Asset Reporting" in this series.

Sources

CRA: Income Tax Folio S5-F4-C1, Income Tax Reporting Currency
Bank of Canada: Exchange rates · Annual exchange rates

Disclaimer

This article is general information only and is not tax advice. Everyone's situation is different; please consult a CPA about your specific arrangements. Service fees are as set out in our written quote.

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