A client pays an invoice in US dollars. The payment service converts the amount and deducts its fee. Entering only the final Canadian-dollar deposit can hide both revenue and costs.
Record the original transaction
Keep the foreign-currency invoice, the date the income arose, the exchange rate used and its source. Canadian tax results generally must be expressed in Canadian dollars, using the relevant rate when the amount arises. CRA permits certain alternative sources and, in some circumstances, average rates; an annual average is not automatically suitable for every transaction. CRA Folio S5-F4-C1.
Suppose a US$1,000 fee is earned when the appropriate rate is C$1.35 per US dollar. The starting Canadian-dollar revenue is $1,350. This is an invented rate for arithmetic, not a historical exchange-rate quote.
Reconcile the payment separately
Continue the same invoice. Suppose the customer later pays the full US$1,000 and the processor immediately converts it at an acceptable rate of C$1.38, then deducts a separately stated C$20 fee. This example leaves sales tax out.
| Record | Canadian-dollar amount |
|---|---|
| Revenue and receivable when earned | $1,350 |
| Payment value before the fee | $1,380 |
| Exchange gain: $1,380 - $1,350 | $30 |
| Processing fee | $20 |
| Bank deposit: $1,380 - $20 | $1,360 |
The payment clears the $1,350 receivable. Record the $30 exchange gain and $20 fee separately; the $1,360 deposit is not another sale. Keep the settlement statement showing the gross conversion, rate and fee beside the original invoice. If the processor builds its charge into the conversion rate instead, do not invent a separate fee that the records cannot support.
Your monthly record should let someone follow: foreign amount, Canadian-dollar revenue, receivable, payment received, exchange difference and fees. The Bank of Canada's exchange-rate page provides published rates and explains its conventions.
Sales-tax treatment is a separate question. A foreign currency or foreign mailing address alone does not decide whether GST/HST applies.
Before filing, resolve whether you are looking at operating business income or a separate capital transaction. The $200 rule sometimes discussed for personal foreign-currency capital gains is not a general exemption for freelance earnings.
Checked October 22, 2026. See also unpaid invoices at year-end.
