A loan extension need not trigger an FX gain

CRA likely considers that the renewal of a foreign currency borrowing by a taxpayer from a related company following its maturity (i.e., an extension of the maturity date) will not give rise to a gain or loss under s. 39(2) unless there was an intention by the parties that the loan be novated.

Neal Armstrong. Summary of 14 March 2014 Memo 2013-0507661I7 under s. 39(2).