Prescribed interest on a foreign currency PLOI is translated at the spot rate when the loan was made

When a Canadian-resident corporation elects for a qualifying loan made by it to a non-resident affiliate to be a pertinent loan or indebtedness, for example, a non-interest-bearing U.S.-dollar loan made to a non-resident subsidiary, it will compute the prescribed interest rising on the loan under s. 17.1 using the spot rate at the date the loan was made (assuming it has not made a functional currency election).

Neal Armstrong. Summary of 4 June 2014 T.I. 2014-0517151E5 under s. 261(2).