On schedule 3, report the stock and FX gains and losses separately.

2) why did you not have to calculate the fx gain/loss when you sold the stock Dec15,20×5…as you did when you bought.

3) How would you reflect gains or loss in schedule3. would you make it seperate transactions (stock and fx) or would you just change the proceeds of disposition to reflect both (stock g/l and fx g/l)

Whether a gain or loss is capital or not depends on the individual circumstances. There are a number of factors the CRA considerers when looking at whether a taxpayer can claim a gain or loss as a capital gain or loss or as a regular income/loss.

The issue of whether a transaction of account of income or capital is really the subject of an article in and of itself. For most people, trading securities is capital.

If you’d like more info, please take a look at http://www.cra-arc.gc.ca/E/pub/tp/it479r/it479r-e.html

Thanks for your reply!

So as you said, all transaction values should be converted to CAD for tax. That means this employee has $2000CDN loss, right? Because he has already paid tax for $14000CDN as direct income.
what I don’t understand here is whether this kind of situation is treated as a gain or a loss.

The Canada Revenue Agency and the Government of Canada will not accept a taxpayer’s investment or foreign exchange risks. That being said, all transactions’ must be converted into Canadian dollars at the rate in effect at the time the transaction took place.

While this taxpayer has a gain in USD, but is in fact a loss in CAD. The ACB is the amount paid in USD and translated into CAD at the rate in effect at the date of vesting. Similarly, the POD is converted into CAD at the rate in effect at the date of disposition.

The gain or loss is treated as capital or income depending on the taxpayer’s personal situation.

For example, company vests 1000 shares of restricted stock at $10US per share to employee as direct income, these stock values are automatically converted to Canadian dollars using vesting day exchange rate 1USD = 1.4CDN. That is total $14000CDN, and tax is charged accordingly, say $7000CDN.
Later the employee sells all 1000 shares at $12US per share, the exchange rate on the day of sales is 1USD = 1CND. That’s total 12000CDN.
So there is $2000 gain if calculated in US dollar, but actually a 2000CDN total loss calculated in Canadian dollar for tax purpose.
In such case, how to calculate ACB, earning per share and capital gain / loss? What about the tax the employee have paid?
Thanks!

To be clear, it was the Bank of Canad’s site showing the noon rates that stated that the CRA accepts their rates as gospel. I was unable to find any real evidence of which rate to use.

I would think that the amount of the investment and the rate change would have to be huge to have any real tax implications.

That being said, since CRA uses noon as you’ve stated, and messing with governmental tax agencies is a habit I don’t want to start, I’ll stick with noon. Thanks for your ultra-quick response on this.