Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
1992 Corporate Management Tax Conference
FOREIGN EXCHANGE GAINS AND LOSSES
Question 7
For purposes of subparagraph 95(2)(f)(ii) and Regulation 5907(6), under what circumstances will a particular currency be considered "reasonable in the circumstances"? Specifically, if a corporation carrying on business in a,foreign jurisdiction other than the United States is financed by U.S. dollar loans or shares issued in U.S. dollars, is it reasonable to calculate any gains or losses in respect of the loans or shares in U.S. dollars or must the currency of the country in which the particular corporation is resident be used? Is the currency used in the financial statements of the corporation relevant?
Department's Position
What is reasonable in the circumstances can only be determined on a case by case basis. There are no hard and fast rules. In, our view the currency in which a particular affiliate's financial statements are presented, or shares or loans are denominated, are not, in and by themselves, reasonable bases for such currency to be the "calculating currency". Where a particular currency has become the generally accepted currency for conducting business in a country, such currency may be considered "reasonable in the circumstances", notwithstanding that some other currency is the official currency of that country. As well, the currency that is used for income tax purposes in the foreign jurisdiction would normally be considered "reasonable in the circumstances".
Prepared by: Tim Kuss
June 6, 1992
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1992
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1992
Email this Content