Accurately reporting more complex foreign exchange transactions can save you in accounting fees and other potential costs at tax time.
Recording foreign transactions incorrectly can result in significant errors in your accounts receivable and accounts payable balance which may create artificial gains and losses when settled. Also, if you use incorrect exchange rates, your income and expenses may be over or understated. These types of errors result in incorrect taxable income calculations and therefore paying the wrong amount of tax. If you’ve incorrectly recorded gains, you will be paying too much tax and if you’ve incorrectly recorded losses, you are at risk of penalties and interest in the event of a CRA audit.
Click here for an article from www.mondaq.com that explains some of the issues with recording foreign exchange.
Our digital solutions allow us to help businesses across Canada with their bookkeeping needs. Contact us today for more information about how we can help your business.
(Please note, we are not affiliated with Mondaq)