Yes, it is part of OCI. So it is taxable as part of the business income. Also there is line 8231: Foreign Exchange Gains/Losses in Other Income
Unless you are working in accordance with IFRS, it is NOT part of OCI.
When performing compilation engagements, you need to reconcile these unrealized balances on your schedule 1. Do NOT put anything onto the OCI section of the GIFI.
As for realized FX G/L, you would include them in line 8230 or 8231 of the GIFI 125 (depending on which software you use).
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@nezzer - they are in CAD by the time they hit the T2. The bookkeeping is simply in US dollars until year end when adjustments are made to bring totals to Canadian dollars.
For the unrealized gains/losses, I included them in the Extraordinary items section which is then deducted from the Net Income for Tax purposes, thus has no effect on the Taxable income. For the realized Gains/Losses, I would take your advise and put them on line 8231 then. Thank you!!!
Practically speaking, you should be putting all the realized & unrealized income/loss on 8230 & 8231, and then adding back the unrealized portion FX on schedule 1 (as we have mentioned).
Your treatment is correct, however. I do emphasize again refraining from using any of the T2 components that reconcile and report under a specified framework (extraordinary items is one of them), as these are reserved primarily for public entities.
Best of luck to you!
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@niina Yes this happens to me often. For this reason I canât rely on T5008s for anything other than a long Canadian $ stock trade. For US transactions, puts, calls, and shorts, you need a good report from the portfolio manager. Failing that report itâs a lot of combing through trading summaries. I use the s3M and donât bother importing the T5008s. I report totals of each account on the s3M and from there it easy to allocate a percentage to spouse or assign an exchange rate. CRA has never come back to me and asked for the details by stock trade but itâs readily available if they want it.
Ok, that is good to know. So, for these small businesses I should not touch the extraordinary items section, got it. I am just curious as how do you account for the current income taxes? (The provision income taxes expense as I call it). I normally put this amount on line 9990 in the extraordinary items section, now I wonder if that is the best treatment for it!?
I have clients receiving US Social security which is deposited in their US bank accounts. Some leave it there, some occasionally take chunks out at whatever rate of the day. They were taxed at the average year US$ rate for the full amount even though they did not withdraw it all., They donât account for the +/- difference between the rate they were taxed on and the rate received. Seems to me, given the amounts involved, the exercise is not worth it. Anyone agree?
For simple treatment
Dr. Income tax expense
Cr. Income taxes payable
The expense provision goes into the GIFI 140 under current income taxes (and to your schedule 1), and the applicable offset to the balance sheet GIFI 100 as a lability under taxes payable.
Your provision should never touch the income statement on the T2
wait, do you use Tax Cycle? In T2 of Tax Cycle, I only have current income tax as line 9990, and it is automatically deducted in Sch 1.
The Schedule 140 is only used when there are multiple S125âs.
I use line 9990 on S125 for provision for tax the same way you do @CalgaryTax91
If you look at S140 you will see that it also says Net Income before âExtraordinary Itemsâ and the GIFI code is exactly the same 9990.
Not exactly sure why the CRA labels âCurrent Income Taxâ an extraordinary item unless itâs their attempt at sarcasm or tasteless humour. 
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I am a religious user of Cantax.
As long as the provision shows on the schedule 1, youâre good. I assume this is the equivalent to my Gifi 140 lol
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