Subsection 261(1) - Definitions
Canadian Tax Results
Administrative Policy
26 May 2016 IFA Roundtable Q. 3, 2016-0642111C6 - PUC of Shares of a FC Reporter
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| Tax Topics - Income Tax Act - Section 84 - Subsection 84(3) | Canadian corporation with a USD functional currency can be subject to Part XIII withholding obligations on its USD prefs resulting from FX fluctuations | 127 |
Elected Functional Currency
Administrative Policy
S5-F4-C1 - Income Tax Reporting Currency
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Functional Currency
Administrative Policy
S5-F4-C1 - Income Tax Reporting Currency
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Articles
Eric Bretsen, Heather Kerr, "Tax Planning for Foreign Currency", 2009 Conference Report (CTF), C. 35.
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| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 261 - Subsection 261(18) | 168 | |
| Tax Topics - Income Tax Act - Section 261 - Subsection 261(20) | 175 |
Relevant Spot Rate
Administrative Policy
GST/HST Memorandum 3-6 Conversion of Foreign Currency July 2018
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| Tax Topics - Excise Tax Act - Section 159 | 529 |
27 April 2017 Internal T.I. 2017-0684831I7 - Changes to relevant spot rate
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| Tax Topics - Income Tax Act - Section 261 - Subsection 261(7) | must use Bank of Canada rate on conversion | 102 |
S5-F4-C1 - Income Tax Reporting Currency
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Tax Reporting Currency
Administrative Policy
9 March 2016 Internal T.I. 2015-0612501I7 - ITA 261(21) anti-avoidance
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|---|---|---|
| Tax Topics - Income Tax Act - Section 261 - Subsection 261(20) - Paragraph 261(20)(b) | s. 261(21) cannot apply to an FX hedging contract between a Canco which has the Canadian dollar as its functional currency and its parent which uses another currency | 260 |
Subsection 261(2) - Canadian currency requirement
Cases
Ferlaino v. Canada, 2017 FCA 105
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| Tax Topics - Income Tax Act - Section 7 - Subsection 7(1) - Paragraph 7(1)(a) | exercise price of employee stock options should be translated at the exercise-date spot rate | 181 |
Canada v. Agnico-Eagle Mines Limited, 2016 FCA 130
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| Tax Topics - Income Tax Act - Section 39 - Subsection 39(2) | conversion of a U.S.-dollar convertible debenture resulted in no FX gain based on the appreciation in the underlying shares | 323 |
Korfage v. The Queen, 2016 TCC 69 (Informal Procedure)
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| Tax Topics - Treaties - Income Tax Conventions - Article 18 | deduction for U.S. pension income deduction translated at exchange rate for year of receipt | 138 |
See Also
Agnico-Eagle Mines Limited v. The Queen, 2015 DTC 1008 [at 43], 2014 TCC 324, aff'd 2016 FCA 130
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| Other locations for this summary | |
|---|---|
| Tax Topics - Income Tax Act - Section 39 - Subsection 39(2) | U.S. dollar principal of a convertible debenture should be considered on conversion to have been settled at the historical exchange rate when the conversion price was set |
| Locations of other summaries | Wordcount | |
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| Tax Topics - General Concepts - Evidence | expert opinion on domestic law excluded | 31 |
Ferlaino v. The Queen, 2016 TCC 105 (Informal Procedure)
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| Locations of other summaries | Wordcount | |
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| Tax Topics - Income Tax Act - Section 7 - Subsection 7(1) - Paragraph 7(1)(a) | exercise price of employee stock options to be translated at the exercise-date spot rate | 201 |
| Tax Topics - Income Tax Act - 101-110 - Section 110 - Subsection 110(1.5) - Paragraph 110(1.5)(a) | purpose of satisfying exe4rcise price test | 249 |
Administrative Policy
S3-F4-C1 - General Discussion of Capital Cost Allowance
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20 November 2015 External T.I. 2014-0539951E5 - Foreign Currency Denominated Dividends
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| Tax Topics - Income Tax Act - Section 89 - Subsection 89(14) | U.S.-dollar dividends translated at spot rate on payment date | 41 |
24 November CTF Annual Roundtable, Q.10
9 October 2015 APFF Financial Strategies and Financial Instruments Roundtable Q. 5, 2015-0588981C6 F - Foreign currency stock market transactions
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10 June 2014 Ministerial Correspondence 2014-0529961M4 - Capital gains on property in foreign currency
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4 June 2014 External T.I. 2014-0517151E5 - S. 17.1 and debt denominated in foreign currency
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| Tax Topics - Income Tax Act - Section 17.1 - Subsection 17.1(1) | prescribed interest on foreign currency PLOI translated at spot rate when loan made | 186 |
14 January 2011 External T.I. 2004-0098601E5 - Foreign currency borrowings and ss 214(7) and (8).
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| Locations of other summaries | Wordcount | |
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| Tax Topics - Income Tax Act - Section 214 - Subsection 214(15) | 91 | |
| Tax Topics - Income Tax Act - Section 214 - Subsection 214(7) | FX movements can cause deemed interest | 87 |
| Tax Topics - Income Tax Act - Section 214 - Subsection 214(8) - Paragraph 214(8)(c) | 105 |
Bank of Canada Annual and Monthly Average Exchange Rates
Articles
Chris Van Loan, Peter Lee, "Agnico Eagle Mines Limited v. The Queen", International Tax, Wolters Kluwer CCH, No. 80, February 2015, p.1.
Janette Y. Pantry, Soraya M. Jamal, "The Thin Cap Rules: Revisiting the Foreign Exchange Anomaly", Corporate Finance, 2011, p. 1934
Patrick Marley, Amanda Heale, "New Foreign Currency Rules: Are They Functional?", International Tax, CCH, December 2007, No. 37, p. 7.
Paragraph 261(2)(b)
See Also
Administrative Policy
27 November 2018 CTF Roundtable Q. 14, 2018-0779911C6 - Foreign exchange
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|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(14) | accrued interest translated on transfer date | 51 |
Subsection 261(3) - Application of subsection (5)
Subsection 261(5) - Functional currency tax reporting
Paragraph 261(5)(a)
Administrative Policy
2016 Ruling 2016-0629011R3 - PUC reinstatement under 212.3(9)
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| Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(18) - Paragraph 212.3(18)(c) - Subparagraph 212.3(18)(c)(v) | exclusion where (10)(f) corp on-subscribes proceeds in FA investments | 168 |
| Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(9) - Paragraph 212.3(9)(b) - Subparagraph 212.3(9)(b)(ii) - Variable A - Clause (b) | PUC restoration where borrowed money dividended up only to the level of a lower-tier CRIC, with cross-border PUC of both lower- and upper-tier CRICs computed both in Cdn$ and U.S.$ where lower-tier CRIC had U.S.$ EFC | 599 |
S5-F4-C1 - Income Tax Reporting Currency
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Articles
Geoffrey S. Turner, "New and Improved Functional Currency Proposals", International Tax, No. 43, December 2008, p. 1.
Subsection 261(6) - Partnerships
Administrative Policy
S5-F4-C1 - Income Tax Reporting Currency
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Subsection 261(6.1) - Foreign affiliates
Administrative Policy
26 April 2017 IFA Roundtable Q. 4, 2017-0691211C6 - App of s. 261(21) to loan with FA
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| Tax Topics - Income Tax Act - Section 261 - Subsection 261(20) | application of s. 261(21) to deny a hedge of a U.S. dollar loan | 158 |
S5-F4-C1 - Income Tax Reporting Currency
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Subsection 261(7) - Converting Canadian currency amounts
Administrative Policy
27 April 2017 Internal T.I. 2017-0684831I7 - Changes to relevant spot rate
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| Tax Topics - Income Tax Act - Section 261 - Subsection 261(1) - Relevant Spot Rate | consistent use of Bloomberg, Thomson Reuters or OANDA FX spot rates generally is acceptable | 135 |
S5-F4-C1 - Income Tax Reporting Currency
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Paragraph 261(7)(h)
Subsection 261(8)
Administrative Policy
S5-F4-C1 - Income Tax Reporting Currency
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Subsection 261(9)
Paragraph 261(9)(a)
Administrative Policy
7 October 2016 APFF Roundtable Q. 17, 2016-0652781C6 F - Functional currency and acquisition of control
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| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 111 - Subsection 111(4) - Paragraph 111(4)(e) | FX gains or losses on pre-transition debts not affected | 223 |
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(10) | exclusion of pre-transition debts | 147 |
Subsection 261(10)
Administrative Policy
S5-F4-C1 - Income Tax Reporting Currency
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Subsection 261(11) - Determination of amounts payable
Administrative Policy
S5-F4-C1 - Income Tax Reporting Currency
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Paragraph 261(11)(a)
Administrative Policy
21 January 2015 Internal T.I. 2014-0540631I7 - S.261 and loss carryback request
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| Tax Topics - Income Tax Act - Section 157 - Subsection 157(1) - Paragraph 157(1)(a) | instalment method of a functional currency reporter after loss carryback | 33 |
Subsection 261(12) - Application of subsections (7) and (8) to reversionary years
Administrative Policy
S5-F4-C1 - Income Tax Reporting Currency
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13 February 2013 External T.I. 2011-0430921E5 F - S. 261 - Loss carry-back & loss carry-forward
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| Tax Topics - Income Tax Act - Section 261 - Subsection 261(15) | carryback of non-capital loss following revocation of functional currency election to functional currency year | 91 |
Subsection 261(14)
Administrative Policy
S5-F4-C1 - Income Tax Reporting Currency
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Subsection 261(15) - Amounts carried back
Administrative Policy
13 February 2013 External T.I. 2011-0430921E5 F - S. 261 - Loss carry-back & loss carry-forward
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| Tax Topics - Income Tax Act - Section 261 - Subsection 261(12) | conversion to U.S. dollar and back again changed non-capital losses | 99 |
Paragraph 261(15)(a)
Administrative Policy
S5-F4-C1 - Income Tax Reporting Currency
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Subsection 261(16)
Administrative Policy
S5-F4-C1 - Income Tax Reporting Currency
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Subsection 261(17)
Administrative Policy
S5-F4-C1 - Income Tax Reporting Currency
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Subsection 261(18) - Anti-avoidance
Administrative Policy
S5-F4-C1 - Income Tax Reporting Currency
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Articles
Eric Bretsen, Heather Kerr, "Tax Planning for Foreign Currency", 2009 Conference Report (CTF), C. 35.
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| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 261 - Subsection 261(1) - Functional Currency | 131 | |
| Tax Topics - Income Tax Act - Section 261 - Subsection 261(20) | 175 |
Subsection 261(20) - Application of subsection (21)
Administrative Policy
26 April 2017 IFA Roundtable Q. 4, 2017-0691211C6 - App of s. 261(21) to loan with FA
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| Tax Topics - Income Tax Act - Section 261 - Subsection 261(6.1) | application of s. 261(21) to upstream USD loan to Cdn$ indirect parent | 139 |
Articles
Eric Bretsen, Heather Kerr, "Tax Planning for Foreign Currency", 2009 Conference Report (CTF), C. 35.
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| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 261 - Subsection 261(1) - Functional Currency | 131 | |
| Tax Topics - Income Tax Act - Section 261 - Subsection 261(18) | 168 |
Paragraph 261(20)(b)
Administrative Policy
9 March 2016 Internal T.I. 2015-0612501I7 - ITA 261(21) anti-avoidance
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|---|---|---|
| Tax Topics - Income Tax Act - Section 261 - Subsection 261(1) - Tax Reporting Currency | non-resident parent would have Canadian dollar as tax reporting currency | 78 |
Subsection 261(21) - Income, gain or loss determinations
Administrative Policy
S5-F4-C1 - Income Tax Reporting Currency
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Articles
John Lorito, Trevor O'Brien, "International Finance – Cash Pooling Arrangements", 2014 Conference Report, (Canadian Tax Foundation), 20:1-33
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