# Capital gains on gambit



## NAVigator (May 21, 2012)

What's the correct way to calculate a capital gain/loss on buying & selling an interlisted stock (i.e. a Norbert's gambit). The buy & sell transactions are right after one another, but are you supposed to use the date of settlement for the exchange rate (for one of the transactions)?


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## GoldStone (Mar 6, 2011)

It's the day of transaction, not the settlement day. 

CRA rule:



> Report your gains or losses in Canadian dollars. Use the exchange rate that was in effect on the day of the transaction or, if there were transactions at various times throughout the year, you can use the average annual exchange rate.


Note that you can't mix and match the exchange rates. If you choose to use the average annual rate, you have to use it for all transactions.

Source:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/127/clc-rprt/


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## NAVigator (May 21, 2012)

Thanks for the reply Goldstone. I was always under the impression that the CRA considered the date of acquisition or disposition as the settlement date (CRA bulletin IT-133) and this seemed correct to use for foreign exchange. The information quoted is useful, but are they considering the date of transaction to be trade date or settlement date?


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## AltaRed (Jun 8, 2009)

I have always used trade date since that is when I made the decision and when I convert funds if necessary to cover the acquisition. However, brokerage statements always show settlement date and that is the basis for determining in which year cap gains/losses are made (as in near year end, one always sees emails, notices, statements indicating the last day to do business in the current year - which is 3 trading days before year end). So the more correct method is Settlement date. That said, I don't think it matters one iota for forex rates as long as you are consistent from trade to trade, year by year.


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## GoldStone (Mar 6, 2011)

Cap gains = Proceeds - Cost. The value of Proceeds and Cost is fixed on the trade date, not on the settlement date. Trade date seems like a more logical choice to me.

I agree with AltaRed though. You should be fine either way. Just be consistent.


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## humble_pie (Jun 7, 2009)

i was just out in my backyard looking at what appears to be a post-nuclear wreck zone save & except where my lovely neighbour has already raked out one of my flower beds

& there is a bitter wind & it started to snow, on this 12th day of april in the year of our lord two thousand & thirteen

i haven't done my taxes yet either

all in all it seems to be a day for going back to bed


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