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The short answer
Report naira income on Form T2125 by converting each payment to Canadian dollars at an acceptable rate for the day it arose, adding the gross amounts (before any Nigerian withholding tax) as business income, and deducting your business expenses in Canadian dollars. Because the Bank of Canada publishes no naira rate, choose an independent rate source that meets the CRA's folio conditions and use it the same way every year.
What T2125 is for
Form T2125, the Statement of Business or Professional Activities, is where a self-employed person in Canada reports business income and expenses with their personal return. The CRA's companion guide is T4002, Self-employed Business, Professional, Commission, Farming, and Fishing. If you freelance for Nigerian clients from Canada, that income belongs on T2125 whatever currency it was paid in.
Step 1: list every payment in naira
Start with a simple table of each amount you earned: date, client, invoice number, gross fee, Nigerian withholding tax (if any), and the amount you actually received. Build it from invoices and from the account statements where the money landed. Doing this monthly is far easier than rebuilding a year from chat messages in April.
Step 2: convert to Canadian dollars
The CRA's Income Tax Folio S5-F4-C1 sets the rule. Amounts are converted at the relevant spot rate for the day they arise, and for days after 28 February 2017 that is the Bank of Canada rate for the day (paragraphs 1.3 and 1.4). The difficulty for naira is that the Bank of Canada does not publish one: its daily table, last dated 23 Oct 2026 when we checked, lists 24 currencies against the Canadian dollar, and the naira is not among them.
The folio allows a rate from another source, naming Bloomberg, Thomson Reuters and OANDA as examples, if it is widely available, verifiable, published by an independent provider on an ongoing basis, recognised by the market, used under accepted business principles, used for your financial statements, and used consistently from year to year (paragraph 1.6). Pick one such source, note it in your records, and use it for every naira amount. Our article which exchange rate to use for naira income goes further, including when an average rate is acceptable.
Step 3: enter gross income, not what landed
If a Nigerian company withheld tax, the gross fee is your income; the withheld amount is tax paid for you. Enter the gross converted figure in the income section of T2125, and keep the withholding receipts to support a foreign tax credit on your return (see claiming Nigerian WHT). Convert the tax at the same rate as the related income, as the CRA's foreign tax credit folio (S5-F2-C1, paragraph 1.42) requires.
Worked example
Example only, with made-up rates from one consistent source.
| Date | Gross fee (₦) | WHT (₦) | Rate (₦ per CA$1) | Gross (CA$) | WHT (CA$) |
|---|---|---|---|---|---|
| 12 Mar | 1,500,000 | 150,000 | 1,000 | 1,500.00 | 150.00 |
| 20 Jul | 2,400,000 | 0 (individual client) | 1,200 | 2,000.00 | 0.00 |
| 5 Nov | 3,250,000 | 325,000 | 1,250 | 2,600.00 | 260.00 |
| Total | 7,150,000 | 475,000 | 6,100.00 | 410.00 |
The CA$6,100.00 goes in as business income. The CA$410.00 is the Nigerian tax you may claim as a credit, subject to the limit. Notice that adding the naira and dividing by one rate would give a different answer; with a currency moving this much, converting payment by payment is the safer default.
Step 4: list expenses
Expenses are entered in Canadian dollars. Most of yours will already be in CAD (internet, software, phone, a share of your home if you qualify), but some may be in naira, such as paying a Lagos-based assistant or buying data for a site visit. Convert naira expenses the same way as naira income. Typical lines for a freelancer:
- advertising and website costs;
- software subscriptions and professional fees, such as an accountant;
- bank and transfer charges on business accounts and on receiving client payments;
- business-use-of-home expenses, if you meet the CRA conditions (see home office expenses);
- equipment such as a laptop, claimed through capital cost allowance rather than as a single expense;
- subcontractors, including Nigerian freelancers you pay for part of a job.
If naira you held lost value before you converted it, ask an accountant how that gain or loss is treated rather than folding it into expenses.
Payments through platforms and US dollar accounts
Some Nigerian clients pay in US dollars or through a platform that converts for you. If the amount arrives in US dollars, convert it using the Bank of Canada US dollar rate for the day, which the Bank does publish. If a platform converts naira to dollars and charges a fee, report the gross fee as income and the platform charge as an expense, rather than only the net amount that reached you. Keep the platform's statement as the record of both.
Step 5: keep the file
The CRA says to keep business records for at least six years from the end of the tax year they relate to. Keep invoices, bank statements showing each receipt, the rate source and the rate for each day, withholding receipts, and expense receipts. If records are in naira only, your conversion table is part of the record.
Where Pryme fits
A Pryme Business Account keeps naira client receipts in one place, separate from personal money, with statements you can export as regular or verifiable documents through Pryme's partner VerifyDoc.ai (receipts and statements). The Finance agent can prepare a payment-by-payment list for you to convert and check. When you convert naira, the app shows the rate and the fee before you approve; that conversion rate is not a substitute for the CRA's rules on reporting rates.
Questions people ask
How do I report income in naira on my Canadian tax return?
Convert each payment to Canadian dollars at an acceptable rate for the day it arose and report the gross total on Form T2125 as business income.
Does the Bank of Canada have a naira exchange rate?
No. Its daily table (checked 23 Oct 2026) lists 24 currencies and not the naira, so you need an alternative source that meets the CRA's conditions.
Do I report what I received or what I invoiced?
The gross amount you earned. If Nigerian tax was withheld, report the gross fee and claim the tax as a foreign tax credit with the receipt.
Can I deduct payments to a freelancer in Nigeria?
Payments to subcontractors for your business are generally expenses. Convert them to CAD the same way and keep proof of payment and the work done.
Sources
- 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: Income Tax Folio S5-F2-C1, Foreign tax credit (modified 31 Mar 2026) · accessed Oct 2026
- CRA: Tax tips for new businesses, keeping records · 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.