AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Holding foreign currency is not taxed in itself; a gain or loss arises when you dispose of it, for example by converting it back to Canadian dollars. For individuals, the CRA says foreign exchange gains or losses on capital transactions are reported only to the extent the net amount for the year is more than $200. Interest earned on a foreign-currency balance is income every year, converted to Canadian dollars.
Many Nigerians in Canada hold US dollars, pounds or euros: savings brought from Nigeria, payments from foreign clients, or money set aside for travel. The CRA cares about two things: the interest the money earns, and the gain or loss when you convert it. Simply holding it does not create a tax bill.
The $200 rule for currency gains
The CRA's guide T4037, Capital Gains 2025, covers foreign exchange gains or losses from capital transactions in foreign currencies, meaning money itself. It says you must only report the net gain or loss for the year that is more than $200, and if the net amount is $200 or less, there is no capital gain or loss. In practice:
- Add up gains and losses from all your foreign-currency conversions in the year.
- If the net result is a gain of $200 or less, or a loss of $200 or less, there is nothing to report.
- If it is more, only the part above $200 is reported as a capital gain or loss.
- Capital gains are taxed at the inclusion rate the CRA sets; T4037 describes it as one-half for 2025.
The rule is about capital transactions: savings you hold and convert. If you trade currencies as a business, or the currency is part of a business, different rules apply.
Worked example: USD savings converted back
Example only. Rates are illustrative, not Bank of Canada figures for any real date.
| Step | USD | Rate (CAD per USD) | CAD |
|---|---|---|---|
| Bought USD in March | 10,000 | 1.30 | 13,000 |
| Converted back in November | 10,000 | 1.36 | 13,600 |
| Gain | 600 | ||
| Less $200 | (200) | ||
| Reported capital gain | 400 |
With a one-half inclusion rate, CA$200 of the CA$400 would be added to taxable income. Had the rate moved only to 1.31, the gain of CA$100 would be under $200, and nothing would be reported. The cost of each purchase comes from the rate you actually paid, so keep the conversion confirmations.
Losses work the same way in reverse. If the US dollar had fallen to 1.25, the CA$500 loss would be reduced by $200 to a reportable capital loss of CA$300; T4037 explains how capital losses can be applied. Because gains and losses across the year are netted first, one large conversion and several small ones are treated alike; what matters is the total.
Which rate to use
The CRA's Folio S5-F4-C1 says amounts are converted at the relevant spot rate for the day the amount arises, which is the Bank of Canada rate for that day or the closest preceding day. The Bank of Canada publishes daily rates for 24 currencies, including the US dollar, pound and euro, by 16:30 ET each business day. The naira is not on that list; for naira the folio allows another widely available, verifiable source used consistently. When you have actual conversion records showing what you paid and received, those are the strongest evidence of your cost and proceeds.
Interest on a foreign-currency balance
Interest is income in the year it is earned, regardless of the currency. The CRA's line 12100 page says foreign interest and dividend income is reported in Canadian dollars, converted at the Bank of Canada rate in effect when it arose, and that foreign taxes are not subtracted from the income you report. Interest paid by a Canadian bank on a US-dollar account appears on your tax slip; interest earned abroad, such as on a Nigerian domiciliary account, you must report yourself. USD fixed deposits in Nigeria covers that case.
Is foreign currency in Canada foreign property?
Form T1135 is about specified foreign property. The CRA's T1135 questions and answers use an example of money in a US bank account counting towards the $100,000 threshold, and say property held in an RRSP or TFSA is excluded. Money held outside Canada, including in Nigerian banks, counts. Whether a particular foreign-currency balance held at a Canadian institution counts depends on the facts; check the CRA's T1135 questions for your situation or ask an adviser. T1135 and Nigerian bank accounts covers the Nigerian side.
Records to keep
- Every conversion confirmation, showing date, amount, rate and fee.
- Statements for each foreign-currency account, showing interest.
- A simple list of the year's conversions with the CAD gain or loss for each, to test against the $200 line.
- Your rate source for any currency the Bank of Canada does not publish.
Where Pryme fits
A Pryme account holds USD, GBP, EUR and NGN side by side, so money can stay in the currency it arrived in until you choose to convert. Each Swap shows the rate first and the fee on its own line, and the confirmation is a dated record you can keep with your tax file. Pryme's rates are transaction rates, not a CRA reporting source. See multicurrency accounts.
Questions people ask
Do I pay tax on US dollars held in a Canadian bank account?
Not on holding them. A gain or loss arises when you convert or spend them, and only the net amount over $200 a year is reported, according to the CRA's guide T4037.
What is the $200 foreign exchange exemption in Canada?
For individuals, a net capital gain or loss of $200 or less in a year on foreign currency is not reported. Only the part above $200 counts.
Is interest on a USD account taxable in Canada?
Yes. Interest is income in the year it is earned and is reported in Canadian dollars.
Which exchange rate does the CRA want?
By default, the Bank of Canada rate for the day the amount arose, under Folio S5-F4-C1. The Bank of Canada publishes USD, GBP and EUR, but not naira.
Sources
- CRA: Guide T4037, Capital Gains 2025 (modified 11 Feb 2026) · accessed Oct 2026
- CRA: Income Tax Folio S5-F4-C1, Income Tax Reporting Currency (updated 27 Jun 2024) · accessed Oct 2026
- Bank of Canada: Daily exchange rates (table dated 23 Oct 2026) · accessed Oct 2026
- CRA: Line 12100, Interest and other investment income (modified 20 Jan 2026) · accessed Oct 2026
- CRA: Questions and answers about Form T1135 (modified 19 Oct 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.