For buys and sells you have to use the exchange rate that was ineffectual on the date the transaction settled. You can only use the average rate for receipts of dividends and interest.

I hope this helps.

Is there an average exchange rate that I should use?
Am I forced to the use the actual rate (assuming I can get the proper one)?

In essence, I sold GBP stock and settled up in CAD. For argument sake, let’s say:
Sold 3500GBP in stock and received $5000CAD (so the exchange rate straight up would be 1.42857). Is this the one to use? Or can use a monthly average (if it benefited me) or an annual average (again – if it benefited me) ?

Returns for 1974 and subsequent taxation years must be prepared on the basis of settlement date whereas 1973 returns must be prepared on the basis of a and (b) above, which in some cases will require the beginning of the year on the trade date basis and the year-end settlement date basis.

http://www.taxtips.ca/personaltax/investing/taxtreatment/shares.htm:
“When shares in the foreign corporation are sold, the proceeds are converted to Canadian dollars using the exchange rate on the date of the sale (trading date).”

http://www.advisor.ca/tax/tax-news/taxation-of-foreign-investments-2375:
“Note as well that when shares in foreign corporations are bought or sold, the corresponding purchase and sale prices must be converted to Canadian dollars using the official exchange rate on the trade date, as opposed to the settlement date.”

On behalf of the commenters here, I just wanna say that we appreciate your effort for writing this article on foreign currency conversions for capital gains. It so unfortunate that our stock brokers do not send us tax receipts that would already contain the sell/buy amounts of our foreign-denominated security transactions IN CANADIAN DOLLAR CURRENCY, which further adds confusion to us taxpayers on the right FX rate to usefor our capital gains/loss declarations on our income tax returns.

Thanks again and more power to you.

The gain or loss is the difference between the proceeds and cost. A taxable capital gain or allowable capital loss is 1/2 of the difference.

The capital gains exemption only applies to the disposition of qualifies small business corporation shares and has no application in this case.

Scenario:
I purchased Chinese Yuan on speculation that the currency was going to appreciate in value over the Cdn dollar. For the transaction, I physically took possession of the Yuan and held it for 1 month or less and exchanged it back to Cdn dollars for a considerable net profit after applying the applicable exchange rates.
For example the total gain less ABC = $500,000 Cdn

Questions:
*Do I understand correctly that this exchange would be taxed as a capital gain and not income?
*At tax time (if a gain) would I be able to claim the $375,000 lifetime capital gains exemption against the gain and therefore be subject to claiming $125,000 as the gain?
*Do I understand correctly that the tax calculation for capital gains is the gain x 50% and then the rest is taxed as income? *Using the example of $125,000 x 50%= $62,500 + income x marginal tax rate?
*Is there a maximum amount of capital gains that an individual can claim under the 50% calculation? In other words can an individual claim unlimited capital gains?
Thanks,