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How do you convert US option premiums to Canadian dollars for tax?

Convert each US-dollar amount to Canadian dollars at the exchange rate for the day it happened. Not once at year-end. Do it for the premium, the assignment and the sale, each on its own day.

Options guide · 8-minute read · Updated 2026-10-28

The short answer

Your Canadian tax return is in Canadian dollars. So every US-dollar amount from an option trade has to be turned into Canadian dollars first.

The general CRA rule for capital gains, as of October 2026: use the Bank of Canada exchange rate for the day of each trade. The Bank of Canada posts one rate for each business day, by 4:30 p.m. Eastern, on its website. The CRA also accepts a rate from another well-known source, like Bloomberg or OANDA, if anyone can look it up. But the Bank of Canada rate is the simple choice.

That means one conversion per event. The premium is converted on the day you sold the option. The share purchase is converted on the day of assignment. The share sale is converted on the day you sold. Three days, three rates.

This page is part of my map of selling options in Canada. It's the currency step behind every US trade in the wheel strategy.

Why one rate per day matters

The exchange rate moves every day. Over a few months, it can move a lot. If you convert everything at one rate, your gain can be off by hundreds of dollars on a single trade.

Here's the part that surprises people. A trade can make money in US dollars and lose money in Canadian dollars, or the other way around. The CRA taxes the Canadian-dollar result.

A premium that expires (hypothetical)

All numbers below are made up, an illustration, not a trade idea. The exchange rates are made up too.

You sell one $50 put on a made-up US stock, XYZ, for US$2.00. You collect US$200. That day, one US dollar is worth C$1.35.

• Premium in Canadian dollars: 200 × 1.35 = C$270

The put expires. In a regular account, that C$270 is generally a capital gain for the year you sold the put. Nothing else to convert.

A premium, then an assignment, then a sale

Now say the same put is assigned instead.

Day 1, sell the put. US$200 at 1.35 = C$270.

Day 2, assigned. You buy 100 shares at $50. That's US$5,000. The rate that day is 1.40.

• Cost in Canadian dollars: 5,000 × 1.40 = C$7,000
• The put premium lowers the cost: C$7,000 − C$270 = C$6,730

That C$6,730 is your Adjusted cost base, or ACB: what the shares cost you for tax, in Canadian dollars.

Day 3, you sell the shares. Here are three ways it could go:

Look at the rows:

• Row 1. You made US$400. But the US dollar fell from 1.40 to 1.30. In Canadian dollars, your gain is only C$30.
• Row 2. You broke even in US dollars. The US dollar rose, so you have a C$230 gain to report.
• Row 3. You broke even in US dollars. The US dollar fell, so you have a C$490 capital loss.

Same trade, same shares. The rate decides the tax.

What about the annual average rate?

The CRA allows an average yearly rate in some cases. It fits income that arrives all through the year, like interest from one account. For a sale of shares or a closed option, the general rule is still the day's rate.

If the CRA treats your trading as a business, the reporting is different, and some business filers use an average rate. The CRA's capital gains guide lists the accepted rates.

For most option sellers in a regular account, stick with the day's rate. It's the one that matches what really happened.

What your broker's slips do, and don't do

Your broker may send a T5008 slip and a yearly gain and loss report. Look closely at the currency.

• Some slips show US-dollar amounts. You still have to convert them.
• Some reports convert for you, at the broker's own rate. That rate may differ from the Bank of Canada's. Check which one it used.
• Expired options often don't appear at all. You need your own record.

Your own trade list is the real record. The slips are a cross-check. For the full filing steps, see how to report options on a Canadian tax return.

The record that makes this easy

Keep one row per event, not per trade. Six columns are enough:

1. Date
2. What happened (sold put, assigned, sold call, called away, expired, bought back)
3. Amount in US dollars
4. Bank of Canada rate that day
5. Amount in Canadian dollars
6. Running ACB of the shares in Canadian dollars

Fill in the rate the same week, while the date is fresh. Doing it in April for a whole year of trades is where mistakes creep in. Our ACB worked example shows the ACB column through a full wheel cycle.

A covered call works the same way in reverse. If your call is assigned, the call premium is added to what you got for the shares. Each amount is converted on its own day. See our assignment guide for what shows up in your account.

Inside a TFSA or RRSP, you don't report each trade. The conversion doesn't matter for tax there. It only matters in a regular account.

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