27 April 2017 Internal T.I. 2017-0684831I7 - Changes to relevant spot rate

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: International and Large Business and Investigations Branch guidelines on the circumstances in which an exchange rate other than the Bank of Canada daily rate will be accepted by the Minister as the “relevant spot rate”.

Position: See document.

Reasons: This document is intended to publicize the administrative position of the CRA in this regard.

2017-068483

From: O'Leary, Maureen
Sent: April-27-17 01:48 PM
To: Hewlett, Randy
Cc: Parr, Gord; Atkinson, James; Chenette, Sylvie; Young, Terry; Beaulne, Dave; Murray, Sue

Subject: Relevant spot rate

Importance: High

Sent on behalf of Sue Murray:

A number of taxpayer representatives have asked for the CRA’s views as to what the CRA will accept as “another rate of exchange that is acceptable to the Minister” for purposes of the definition of relevant spot rate in subsection 261(1) of the Income Tax Act. We have considered the issue and our Assistant Commissioner has approved the following guidelines that taxpayers should consider when deciding whether to use a rate of exchange other than the daily rate quoted by the Bank of Canada:

Recommendation:

• In accordance with the definition of “relevant spot rate” in subsection 261(1) of the Act, taxpayers may always use the daily rate quoted by the Bank of Canada to convert foreign currency to Canadian dollars.
• The Minister will generally accept a rate quoted by another source provided it is:
  • widely available;
  • verifiable;
  • published by an independent provider on an ongoing basis;
  • recognized by the market;
  • used in accordance with well-accepted business principles;
  • used for the preparation of the taxpayer’s financial statements; and
  • used consistently from year to year by the taxpayer.
• Examples of other sources of foreign exchange rates, in addition to the Bank of Canada, that would be generally acceptable to the Minister include Bloomberg L.P., Thomson Reuters Corporation and OANDA Corporation.
• The Bank of Canada rate will still be required in respect of a taxpayer transitioning into or out of income tax reporting in its elected functional currency in accordance with subsections 261(7) or 261(12) of the Act.

Recommandation:

• Conformément à la définition de «taux de change au comptant» au paragraphe 261(1) de la Loi, les contribuables peuvent toujours utiliser le taux quotidien affiché par la Banque du Canada pour convertir une monnaie étrangère en dollars canadiens.
• Le ministre acceptera généralement un taux affiché par une autre source à condition qu’il soit :
  • largement disponible;
  • vérifiable;
  • publié par un fournisseur indépendant de façon continue;
  • reconnu par le marché;
  • utilisé conformément aux principes commerciaux reconnus;
  • utilisé dans la préparation des états financiers du contribuable;
  • utilisé uniformément d’une année à l’autre par le contribuable.
• Bloomberg L.P., Thomson Reuters Corporation et OANDA Corporation sont des exemples de sources de taux de change, outre la Banque du Canada, que le ministre estimerait généralement acceptables.
• Le taux de la Banque du Canada continue d’être requis lorsqu’un contribuable passe à sa monnaie fonctionnelle choisie ou revient à la monnaie canadienne pour déclarer l’impôt, conformément aux paragraphes 261(7) ou 261(12) de la Loi.

Please do not hesitate to contact us if there are any questions or concerns.