ACB On Foreign Currency Based Stock w/ Domestic Currency Fees?

5216 Views 5 Replies 5 Participants Last post by leslie, Jun 21, 2009

eddieparker

Discussion Starter · Jun 18, 2009

Hello!

I'm new to the forum, so apologies if this doesn't belong in this particular sub-forum - feel free to move it elsewhere if it truly belongs there.

I'm currently writing a little web application for me to track my stock transactions, and have it automagically rolled up into positions, asset allocation breakdowns, etc. I'm currently 'stuck' researching the best way to calculate ACB across multiple currencies.

i.e., I trade with Questrade. If I bought 100 shares of stock XYZ at 10$ USD/share, I would have paid a 4.95$ CAD commission.

As I understand it, my ACB is the cost + fees divided by the number of shares. In this case since since my currencies differ, I'd imagine I need to do some currency conversion to make the results mean something. Would I:

- Convert the CAD fee into USD using the exchange rate for the date of purchase and/or sale?
- Convert the USD cost into CAD for the given date, and then do the ACB calc?
- Something else?

There's a variety of sub questions that fall out of this depending on what is the 'correct' answer, but hopefully someone can help me figure this much out.

Thanks in advance!

-e-

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leslie

· #2 · Jun 19, 2009

Each transaction translated separately.

Use FX at settlement date - either noon rate or end of day.

Keep track of ACB

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cardhu

· #3 · Jun 19, 2009

Really? With every broker I’ve ever dealt with, the commission for US$ purchases is measured in US$, and the commission for Cdn$ purchases is measured in Cdn$ ... not that it would make that much of a difference.

ACB is a tax function, and you must report your gains/losses in Cdn$ and pay your taxes in Cdn$ .... so it would make most sense to keep track of your ACB in Cdn$. You can use actual exchange rates in effect on the dates of transaction, or annual average exchange rates, whichever is more advantageous to you ... but you have to pick a method an stick with it ... no cherry picking allowed.

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CanadianCapitalist

· #4 · Jun 19, 2009

cardhu said:
You can use actual exchange rates in effect on the dates of transaction, or annual average exchange rates, whichever is more advantageous to you ... but you have to pick a method an stick with it ... no cherry picking allowed.

I think the first post has an error as well. I used to be with Questrade and their US stock commissions are in US dollars, just like everybody else.

I agree with Cardhu's post. You can use actual exchange rates on the date of transaction or the annual average exchange rates.

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Max

· #5 · Jun 19, 2009

I have a similar question that comes to mind about CIBC's packaged trades, where you spend $395 for 50 trades per year.

If you do $49 trades, your cost base changes for all trades. What is the best way to keep track of this?

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leslie

· #6 · Jun 21, 2009

Agree with the above - use the transaction date, not settlement date for FX calculation.

Re discounts on broker fees. There is a point where nobody wins by getting too picky. Use the transaction slip for the ACB/Proceeds. All the adjustments to that charge you can use to adjust the broker's interest charges you claim at the bottom of the tax schedule.

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