One-time election

1.11 ... A taxpayer need not make an election every year as the language of the requirement described at s. 262(3) is such that,...

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One-time requirement

...The requirement to have a functional currency need only be met for the first tax year to which the taxpayer intends the...

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Election not relevant to other tax-payer's results

1.21 ...[I]t is only the Canadian tax results of the taxpayer electing into the functional...

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No discretion to use other than spot rate

1.22 ... Subsection 261(7) provides that ... carried-forward amounts are to be converted from Canadian...

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No netting

1.24 ... [T]here is no provision in section 261 that allows for the netting of amounts payable to, and receivable from, another taxpayer.

Overview

1.28 Subsection 261(10) ... causes the accrued income, capital gain, loss or capital loss in respect of a particular pre-transition debt...

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Applies automatically to single-and multi-tier partnerships

1.34 ... [A]lthough the partnership is treated as if it had made a functional currency...

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Staggered year ends / FAPI only

1.39 Note that, similar to where a functional currency taxpayer holds an interest in a partnership, it is possible...

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Double conversion

1.43 Note that tax attributes that originate in a Canadian currency year of the taxpayer and that are unused at the time of...

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Integration wtih s. 39(2)

1.50 As is the case with subsection 261(10), where subsection 261(14) deems a taxpayer to make a gain or sustain a loss...

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Overview

1.53 ... In summary, paragraphs 261(11)(a) and (b) provide the following:

• instalment obligations under paragraph 261(11)(a):
  • A...

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Summary of base case

1.57 Paragraph 261(15)(a) applies in situations where the loss year is a functional currency year and the taxpayer wishes to...

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Summary of base cases

1.61 Where the subsidiary’s tax reporting currency is the Canadian dollar – either because it has never elected into the...

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Alignment with wind-up rules

1.65 Subsection 261(17) is designed to align the tax reporting currency of each predecessor corporation with that of...

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Avoidance of prohibition

1.69

Example 3

Facts

Canco elects to report its Canadian tax results in U.S. dollars commencing with its 2008 tax...

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Automatic application of loss denial

1.72 ... The rule applies to deny a loss to the taxpayer where the loss can reasonably be considered to be...

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Potential CRA acceptance of average rate

1.6 ... [I]t may be possible to use an average exchange rate to convert certain items of income.