CRA applies Salada Foods to assumption by taxpayer of affiliate's FX risk

CRA has applied Salada Foods to find that an agreement under which a taxpayer agreed to hedge the FX risk of a euro-zone affiliate which had borrowed in U.S. dollars, by making or receiving annual payments, resulted in the annual realization by it of gains or losses on income account.  Since it was not hedging its own risk from its stand-alone perspective, this was an adventure in the nature of trade.

Neal Armstrong.  Summary of 21 December 2012 Memorandum 2012-0465561I7 under s. 9 - capital gain v. profit - foreign exchange.