Most incorporated IT contractors with a U.S. client eventually stop wiring USD straight to a Canadian-dollar bank account and start using a USD account, Wise, PayPal, or Stripe instead, usually to avoid poor bank conversion rates on every deposit. That decision solves a fee problem but creates a documentation one: each of these platforms generates its own transaction history, its own fee structure, and its own timing for when USD actually becomes CAD, and the bookkeeping needs to follow the conversion event, not just the deposit.
The Conversion Event Is What Triggers the Entry
A USD payment received into a USD-denominated account is not yet a CAD amount. Revenue still needs to be recorded in CAD using the exchange rate on the date the invoice is recognized, generally the Bank of Canada daily rate for that date or a consistently applied average rate. The actual conversion to CAD, whether it happens immediately through the payment processor or later when the contractor moves funds out of a USD holding account, is a separate event that can generate its own foreign exchange gain or loss if the rate has moved between invoice recognition and conversion.
This means two exchange rates are often in play for the same invoice: the rate used to book the revenue, and the rate at which the USD was eventually converted. The difference between them is the realized FX gain or loss, and it needs to be tracked as its own line, not folded into revenue.
Wise
Wise typically shows the mid-market rate at the moment of conversion along with an explicit fee, which makes it one of the easier platforms to reconcile: the conversion rate and the fee are both visible on the same transaction record. A contractor holding a Wise USD balance and converting to CAD periodically, rather than on every deposit, still needs to track the rate on each conversion date individually rather than applying one rate to the whole period.
Where Wise gets more complicated is when USD is held in the account for a period before conversion, since that creates an unrealized position: the corporation is holding USD that has a CAD value that fluctuates with the exchange rate, even though no conversion has happened yet. Whether that unrealized position needs to be revalued at year-end depends on how the corporation’s foreign currency holdings are being tracked; this is a question for whoever prepares the T2 to confirm before year-end.
PayPal
PayPal’s currency conversion rate typically includes a spread above the market rate, separate from any explicit transaction fee, and PayPal’s transaction reports do not always clearly separate the conversion spread from the processing fee. Contractors using PayPal for U.S. client payments should pull the detailed transaction report, not just the account summary, since the summary view can obscure how much of the total deduction from a payment was fee versus conversion spread.
If PayPal is used to hold a USD balance rather than converting immediately, the same unrealized-position question that applies to Wise applies here.
Stripe
Stripe is more commonly used by contractors invoicing through a platform or subscription tool rather than receiving direct client payments, and its payout structure adds another layer: Stripe collects in USD, deducts its processing fee, and then either pays out in USD to a USD account or converts to CAD depending on how the Stripe account is configured. The payout report shows the gross USD amount, the fee, and the net payout, but if Stripe is converting to CAD automatically, the conversion rate used for each payout needs to be captured from the payout detail, not assumed from a general market rate for that day.
USD Bank Accounts
A USD account at a Canadian bank avoids the platform-fee layer but shifts the same conversion-timing question to whenever the contractor moves funds from the USD account to the CAD operating account. Bank USD accounts often have less itemized transaction detail than Wise, so contractors relying on a USD bank account for U.S. client deposits should record the CAD-equivalent value at deposit for revenue purposes and separately record the actual conversion rate and any bank spread when the transfer to CAD happens.
What to Track for Each Platform
Regardless of which platform or combination of platforms is in use, the file needs:
- The exchange rate applied at revenue recognition for each USD invoice, and the source of that rate (Bank of Canada daily, average, or platform rate)
- The exchange rate and fee applied at each actual conversion to CAD, kept separate from the revenue-recognition rate
- Platform fees and conversion spreads as a distinct expense line, not netted silently against revenue
- Whether any USD balance is held unconverted at year-end, and how that balance is being treated for T2 purposes
- Which platform processed each payment, since mixing Wise, PayPal, Stripe, and direct bank deposits across a year without labeling the source makes reconciliation at year-end considerably harder
Where This Connects
Contractors receiving U.S. client income should also review the U.S. client income guide for the underlying GST/HST zero-rating and invoicing questions, and the foreign exchange and multi-currency guide on the Ecomcount side covers the same conversion-timing mechanics from an e-commerce seller’s perspective, which is useful background even though the platforms differ. Contractors holding a USD investment account rather than an operating account should see the T1135 guide for the separate foreign-property reporting question that applies once USD moves from operating cash into investments.