After the taxpayer had arranged to borrow U.S. $75 million through an issuance of debentures, it entered into forward hedging contracts for the future delivery by it of U.S. dollars at specified conversion rates. The difference between the Canadian-dollar equivalent of the taxpayer's U.S.-dollar borrowing, measured at the spot rate of exchange at the time of closing the issuance of the debentures, and the Canadian dollars (net of a fee charged by The Royal Bank for extending the forward contracts) received (around the time of closing) by the taxpayer under the forward contracts, was held to be a deductible expense under s. 20(1)(e). Collier J.,in accepting the evidence of the taxpayer's expert accountant, stated (at p. 6225):
[W]hen one carefully analyzes the situation, there are, from a business and accounting view, two transactions. There was a loan obtained by the plaintiff in the United States. When the funds became available, there was another transaction: the obtaining of Canadian funds. The loss on the second transaction was, in my view, an expense incurred in the course of borrowing the U.S. funds."