Words and Phrases - "sustained"

Canco has an unrealized foreign exchange gain on the USD loan (the “Loan”) owing to it by its wholly–owned subsidiary (Canco 1), and Canco 1 has a corresponding unrealized foreign exchange loss.

A wholly-owned subsidiary of Canco 1 (Canco 2) will agree to repay the Loan on behalf of Canco 1 at maturity and in consideration for that undertaking, Canco 1 will issue a Canadian dollar denominated note (the “Canco 1 Note”), with an equivalent Canadian-dollar principal, to Canco 2. There will be no novation or discharge of the Loan. Will this undertaking by Canco 2 result in Canco 1 sustaining a loss to which s. 39(2) applies?

CRA referenced Consolidated Glass as indicating that the concept of a sustained loss is one of absolute and irrevocable finality, and that foreign exchange gains or losses respecting a debt obligation are considered to realized or sustained only on the settlement or extinguishment of the debt, i.e., on their repayment or legal novation or legal rescission and substitution, and would also result in the creditor realizing a corresponding foreign exchange gain or loss.

Since here there was no novation etc. of the Loan, no loss was sustained by Canco 1.