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.
Principal Issues: Are monthly expenses (i.e. administrative fees or margin interest) additions to the cost base when calculating foreign exchange gains or losses which are capital in nature under subsection 39(2) of the Income Tax Act (the "Act")?
Position: No
Reasons: The provisions regarding additions to the cost base of property are located in subsection 53(1) of the Act. The monthly expenses are not additions to the cost base of foreign currency.
From: Gauthier, Michel
Sent: May 6, 2010 8:05 AM
To: XXXXXXXXXX
Subject: Foreign Exchange Gains and Losses
This is in reply to your email of April 29, 2010 in which you asked whether monthly expenses (i.e. administrative fees or margin interest) are additions to the cost base when calculating foreign exchange gains or losses which are capital in nature under subsection 39(2) of the Income Tax Act (the "Act").
The provisions regarding additions to the cost base of property are located in subsection 53(1) of the Act. The monthly expenses you refer to in your email are not additions to the cost base of foreign currency.
We hope this information is of assistance to you.
Yours truly,
Michel Gauthier
Rulings Officer / Agent des décisions
International & Trusts Division / Division des opérations internationales et des fiducies
Income Tax Rulings Directorate / Direction des décisions et de l'interprétation de l'impôt
Legislative Policy & Regulatory Affairs Branch / Direction générale de la politique législative et des affaires réglementaires
Place de Ville, 320 Queen Street, Tower A, Office 18-31 / Place de Ville, 320 Rue Queen, Tour A, Office 18-31 Ottawa, ON, K1A 0L5
Work - (613)957-2095
Fax - (613)957-2088
Michel.Gauthier2@cra-arc.gc.ca
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