Calculating Capital Gains

Q: I haven't got a clear answer on this, but if someone already has gone thru this please advice me. 1. I have a ameritrade account which I trade on US exchanges, but I am a canadian residents, so how do I calculate capital gains? - I have gone thru all the statements and done the calculation 2. now do I have to exchange the US dollars to canadian dollars on the day which I bought and sold stocks? 3. OR I calculate the gains and do the conversion on 31th of december? 4. And do I also fill any form for revenue US (whatever they call it) and pay tax, or I just pay tax in canada? 5. does it matter if I invested in canadian company in US or US companies does this make any difference on paying tax? 6. some stocks i have bought and sold on the same day some i have hold for longer period.

A: > I haven't got a clear answer on this, but if someone already has gone > thru this please advice me. > 1. I have a ameritrade account which I trade on US exchanges, but I am > a canadian residents, so how do I calculate capital gains? > - I have gone thru all the statements and done the calculation There is nothing special about your account being in US (although securities regulators don't like cross-border accounts, but that's another issue) > 2. now do I have to exchange the US dollars to canadian dollars on the > day which I bought and sold stocks? > 3. OR I calculate the gains and do the conversion on 31th of december? Each tranaction is converted on that day at the day's rate. > 4. And do I also fill any form for revenue US (whatever they call it) > and pay tax, or I just pay tax in canada? you are not taxable in US on these transactions, unless you are a US citizen. Your US broker might want to make you fill a W-8BEN or somesuch to avoid withholding tax, but somehow I sense that ameritrade doesn't know you are in Canada. > 5. does it matter if I invested in canadian company in US or US companies > does this make any difference on paying tax? No. it can make a difference for treatment of dividends, but not cap gains/losses. > 6. some stocks i have bought and sold on the same day some i have hold for > longer period. There are no different short-term/long-term cap gains rates in Canada. > 1. I have a ameritrade account which I trade on US exchanges, but I am > a canadian residents, so how do I calculate capital gains? > - I have gone thru all the statements and done the calculation You calculate it the same as you would dealing with a Canadian broker. using average cost base for the shares. (Note this is different than US rules). > 2. now do I have to exchange the US dollars to canadian dollars on the > day which I bought and sold stocks? > 3. OR I calculate the gains and do the conversion on 31th of december? Technically you should use the exchange rate on the dates of the the transactions, but CRA will accept the average exchange rate for the the month or year. > 4. And do I also fill any form for revenue US (whatever they call it) > and pay tax, or I just pay tax in canada? On capital gains you only owe taxes to Canada. Note that you need to file an approriate IRS form that refers to the tax treaty. Otherwise if the IRS becomes aware that you are a non-resident they can levy a withholding tax of 30% of the sale price (not just the gain), and leave you to file a US tax return to get it back. Of course that will let Ameritrade know that you are a Canadian resident, and trading for you with is violation of Canadian securities rules, and perhaps more important, Ameritrade's internal policy of not competing with their Canadian subsidiary for the business of Canadian residents. > 5. does it matter if I invested in canadian company in US or US companies > does this make any difference on paying tax? Not for capital gains, but it does make difference for taxation of dividends. A US broker is not likely to give you the right T5 slip to make this easy. > 6. some stocks i have bought and sold on the same day some i have hold for > longer period. Assuming you are not a trader, Canadian rules still treat this as as capital gain/loss. US rules do not treat short term trades as capital transactions. .

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