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How does CRA know about foreign income? Along with these tax treaties come information-sharing agreements. For example, the CRA in Canada and the IRS in the United States have an agreement where they share earning information for citizens from each other's countries.

What Is a Currency Certificate? A currency certificate, like a futures contract, grants the holder the right to convert a specific amount of one currency to another at a pre-determined exchange rate until a specific expiration date. The holder of the certificate is not obligated to conclude the transaction.

You must express the amounts you report on your U.S. tax return in U.S. dollars. If you receive all or part of your income or pay some or all of your expenses in foreign currency, you must translate the foreign currency into U.S. dollars.

Gains and losses from foreign currency transactions will generally be taxable (or deductible) in the US or in a foreign country based on the applicable tax law.

Currency conversion calculations are presented in pairs, which means that one currency is quoted against the other. For example, a 1 USD/CAD exchange rate means that 1 USD is equal to about 1.26 CAD. Usually, exchange rates are presented as a number, like 1.26, as in the case of the USD/CAD example.

A: Yes. You should report the most types of foreign income on your Canadian income tax return. Exceptions are some lottery winnings, most gifts and inheritances, child care payments, amounts received from life insurance policy, strike pay received from union, elementary and secondary school scholarship and bursaries.

The government of Canada does not restrict the movement of funds into or out of the country and imposes no restrictions on the buying or selling of any foreign currency. Corporations and individuals can operate in foreign funds and arrange payments in any currency they choose. Prepared by our U.S. Embassies abroad.