Exchange Rates
All Canadian tax filings must be computed using Canadian currency. Since Canada trades extensively with other countries, the issue of foreign currency translation is commonly encountered.
The Canada Revenue Agency allows two basic approaches: each transaction in foreign currency can be converted at the applicable exchange rate for that day, or all transactions in a particular foreign currency which occurred within the fiscal year can be translated at a yearly average rate, according to statistics compiled and published by the Bank of Canada at their website (www.bankofcanada.ca).
Generally, individuals preparing their personal income tax returns for a calendar year will use the yearly average rates.
For your convenience, we attach the schedule of average exchange rates for 2005.
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