Eastern Daylight Saving Time, June 18, 1987 and is not deemed by subsection 112(2.22) to have been issued after that time
by a corporation from a corporation not resident in Canada, if the dividend would have been a dividend in respect of which no deduction could have been made under subsection 112(1) or 112(2) or 138(6) because of subsection 112(2.2) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as it read on June 17, 1987, if the corporation that paid the dividend were a taxable Canadian corporation
shall be deemed to be interest received in the year and not a dividend received on a share of the capital stock of a corporation.
Marginal note:Exception
(4)Subsection (3) does not apply to a dividend described in paragraph (3)(a)
(a)if the share on which the dividend was paid was not acquired in the ordinary course of the business carried on by the corporation; or
(b)to the extent that the dividend would be described by subparagraph 53(2)(b)(ii) if the corporation not resident in Canada were not a foreign affiliate of the corporation.
Marginal note:Deemed interest on certain shares
(5)For the purposes of paragraphs 12(1)(c) and 12(1)(k) and sections 113 and 126, a dividend received after June 18, 1987 and in a taxation year from a corporation not resident in Canada, other than a corporation in which the recipient had or would have, if the corporation were a taxable Canadian corporation, a substantial interest (within the meaning assigned by section 191), on a share, if the dividend would have been a dividend in respect of which no deduction could have been made under subsection 112(1) or 112(2) or 138(6) by reason of subsection 112(2.2) or 112(2.4) if the corporation that paid the dividend were a taxable Canadian corporation, shall be deemed to be interest received in the year and not a dividend received on a share of the capital stock of the payer corporation.
Marginal note:Exception
(6)Subsection (5) does not apply to a dividend described in that subsection to the extent that the dividend would be described by subparagraph 53(2)(b)(ii) if the corporation not resident in Canada were not a foreign affiliate of the recipient.
Marginal note:Proportional holdings in trust property
259(1)For the purposes of designated provisions, if at any time a specified taxpayer acquires, holds or disposes of a particular unit in a qualified trust and the qualified trust elects for any period that includes that time to have this subsection apply,
(a)the taxpayer shall be deemed not to acquire, hold or dispose of at that time, as the case may be, the particular unit;
(b)where the taxpayer holds the particular unit at that time, the taxpayer shall be deemed to hold at that time that proportion (referred to in this subsection as the “specified portion”) of each property (in this subsection referred to as a “relevant property”) held by the trust at that time that one (or, where the particular unit is a fraction of a whole unit, that fraction) is of the number of units of the trust outstanding at that time;
(c)[Repealed, 2005, c. 30, s. 18]
(d)where that time is the later of
(i)the time the trust acquires the relevant property, and
(ii)the time the taxpayer acquires the particular unit,
the taxpayer shall be deemed to acquire the specified portion of a relevant property at that time;
(e)where that time is the time the specified portion of a relevant property is deemed by paragraph 259(1)(d) to have been acquired, the fair market value of the specified portion of the relevant property at that time shall be deemed to be the specified portion of the fair market value of the relevant property at the time of its acquisition by the trust;
(f)where that time is the time immediately before the time the trust disposes of a particular relevant property, the taxpayer shall be deemed to dispose of, immediately after that time, the specified portion of the particular relevant property for proceeds equal to the specified portion of the proceeds of disposition to the trust of the particular relevant property;
(g)where that time is the time immediately before the time the taxpayer disposes of the particular unit, the taxpayer shall be deemed to dispose of, immediately after that time, the specified portion of each relevant property for proceeds equal to the specified portion of the fair market value of that relevant property at that time; and
(h)where the taxpayer is deemed because of this subsection
(i)to have acquired a portion of a relevant property as a consequence of the acquisition of the particular unit by the taxpayer and the acquisition of the relevant property by the trust, and
(ii)subsequently to have disposed of the specified portion of the relevant property,
the specified portion of the relevant property shall, for the purposes of determining the consequences under this Act of the disposition and without affecting the proceeds of disposition of the specified portion of the relevant property, be deemed to be the portion of the relevant property referred to in subparagraph 259(1)(h)(i).
(2)[Repealed, 2005, c. 30, s. 18]
Marginal note:Election
(3)An election by a qualified trust under subsection (1) shall be made by the qualified trust filing a prescribed form with the Minister and shall apply for the period
(a)that begins on the later of
(i)the day that is 15 months before the day on which the election is filed, and
(ii)the day, if any, that is designated by the qualified trust in the election; and
(b)that ends on the earlier of
(i)the day on which the qualified trust files with the Minister a notice of revocation of the election, and
(ii)the day, if any, that is designated by the qualified trust in the notice of revocation and that is not before the day that is 15 months before the day on which the notice of revocation is filed.
Marginal note:Requirement to provide information
(4)Where a qualified trust elects under subsection (1),
(a)it shall provide notification of the election
(i)within 30 days after making the election, to each person who held a unit in the qualified trust at any time in the period before the election was made and during which the election is applicable, and
(ii)at the time of acquisition, to each person who acquires a unit in the qualified trust at any time in the period after the election was made and during which the election is applicable; and
(b)if a person who holds a unit in the qualified trust at any time in the period during which the election is applicable makes a written request to the qualified trust for information that is necessary for the purpose of determining the consequences under this Act of the election for that person, the qualified trust shall provide to the person that information within 30 days after receiving the request.
Marginal note:Definitions
(5)In this section,
designated provisionsmeans sections 146 and 146.1 to 146.4 and Parts X, XI.01 and XI.1, as they apply in respect of investments that are not qualified investments for a trust, and Part X.2; (dispositions désignées)
qualified corporation[Repealed, 2005, c. 30, s. 18]
qualified trustat any time means a trust (other than a registered investment or a trust that is prescribed to be a small business investment trust) where
(a)each trustee of the trust at that time is a corporation that is licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as a trustee or a person who is a trustee of a trust governed by a registered pension plan,
(b)all the interests of the beneficiaries under the trust at that time are described by reference to units of the trust all of which are at that time identical to each other,
(c)it has never before that time borrowed money except where the borrowing was for a term not exceeding 90 days and the borrowing was not part of a series of loans or other transactions and repayments, and
(d)it has never before that time accepted deposits; (fiducie admissible)
specified taxpayermeans a taxpayer that is a registered investment or that is described in any of paragraphs 149(1)(r), (s), (u) to (u.2) and (x). (contribuable déterminé)
Marginal note:Definitions
260(1)In this section
dealer compensation paymentmeans an amount received by a taxpayer as compensation, for an underlying payment,
(a)from a registered securities dealer resident in Canada who paid the amount in the ordinary course of a business of trading in securities, or
(b)in the ordinary course of the taxpayer’s business of trading in securities, where the taxpayer is a registered securities dealer resident in Canada; (paiement compensatoire (courtier))
qualified securitymeans
(a)a share of a class of the capital stock of a corporation that is listed on a stock exchange or of a class of the capital stock of a corporation that is a public corporation by reason of the designation of the class by the corporation in an election made under subparagraph (b)(i) of the definitionpublic corporationin subsection 89(1) or by the Minister in a notice to the corporation under subparagraph (b)(ii) of that definition,
(b)a bond, debenture, note or similar obligation of a corporation described in paragraph (a) or of a corporation that is controlled by such a corporation,
(c)a bond, debenture, note or similar obligation of or guaranteed by the government of any country, province, state, municipality or other political subdivision, or a corporation, commission, agency or association controlled by any such person,
(d)a warrant, right, option or similar instrument with respect to a share described in paragraph (a), or
(e)a qualified trust unit; (titre admissible)
qualified trust unitmeans an interest, as a beneficiary under a trust, that is listed on a stock exchange; (unité de fiducie déterminée)
securities lending arrangementmeans an arrangement under which
(a)a person (in this section referred to as the “lender”) transfers or lends at any particular time a qualified security to another person (in this section referred to as the “borrower”),
(b)it may reasonably be expected, at the particular time, that the borrower will transfer or return after the particular time to the lender a security (in this section referred to as an “identical security”) that is identical to the security so transferred or lent,
(c)the borrower is obligated to pay to the lender amounts equal to and as compensation for all amounts, if any, paid on the security that would have been received by the borrower if the borrower had held the security throughout the period that begins after the particular time and that ends at the time an identical security is transferred or returned to the lender,
(d)the lender’s risk of loss or opportunity for gain or profit with respect to the security is not changed in any material respect, and
(e)if the lender and the borrower do not deal with each other at arm’s length, it is intended that neither the arrangement nor any series of securities lending arrangements, loans or other transactions of which the arrangement is a part be in effect for more than 270 days,
but does not include an arrangement one of the main purposes of which may reasonably be considered to be to avoid or defer the inclusion in income of any gain or profit with respect to the security. (mécanisme de prêt de valeurs mobilières)
security distributionmeans an amount that is
(a)an underlying payment, or
(b)an SLA compensation payment, or a dealer compensation payment, that is deemed by subsection (5.1) to be an amount received as an amount described by any of paragraphs (5.1)(a) to (c); (paiement de titre)
SLA compensation paymentmeans an amount paid pursuant to
(a)a securities lending arrangement as compensation for an underlying payment; or
(b)a specified securities lending arrangement as compensation for an underlying payment, including, if the property transferred or lent is described in subparagraph (a)(ii) of the definitionspecified securities lending arrangement, as compensation for a taxable dividend paid on a share described in subparagraph (a)(i) of that definition; (paiement compensatoire (MPVM))
specified securities lending arrangementmeans an arrangement, other than a securities lending arrangement, under which
(a)a particular person (referred to in this definition as a “transferor”) transfers or lends at any particular time a property to another person (referred to in this definition as a “transferee”) and the property is
(i)a particular share described in paragraph (a) of the definitionqualified security, or
(ii)a property in respect of which the following conditions are met:
(A)the property is
(I)an interest in a partnership, or
(II)an interest as a beneficiary under a trust, and
(B)all or any part of the fair market value of the property, immediately before the particular time, is derived, directly or indirectly, from a share described in subparagraph (i),
(b)it may reasonably be expected, at the particular time, that the transferee — or a person that does not deal at arm’s length with, or is affiliated with, the transferee — will transfer or return after the particular time to the transferor — or a person that does not deal at arm’s length with, or is affiliated with, the transferor (referred to in this definition as a “substitute transferor”) — a property that is identical or substantially identical to the property so transferred or lent, and
(c)the transferor’s (together with any substitute transferor’s) risk of loss or opportunity for gain or profit with respect to the particular property is not changed in any material respect; (mécanisme de prêt de valeurs mobilières déterminé)
underlying paymentmeans an amount paid on a qualified security by the issuer of the security. (paiement sous-jacent)
Marginal note:Eligible dividend
(1.1)This subsection applies to an amount if the amount is received by a person who is resident in Canada, the amount is deemed under subsection (5.1) to be a taxable dividend, and the amount is either
(a)received as compensation for an eligible dividend, within the meaning assigned by subsection 89(1); or
(b)received as compensation for a taxable dividend (other than an eligible dividend) paid by a corporation to a non-resident shareholder in circumstances where it is reasonable to consider that the corporation would, if that shareholder were resident in Canada, have designated the dividend to be an eligible dividend under subsection 89(14).
Marginal note:References — borrower and lender
(1.2)For the purposes of subsections (8), (8.1), (8.2), (8.3) and (9.1) and 212(2.1) and (3), in respect of a specified securities lending arrangement,
(a)a reference to a borrower includes a transferee; and
(b)a reference to a lender includes a transferor.
Marginal note:Non-disposition
(2)Subject to subsections 260(3) and 260(4), for the purposes of this Act, any transfer or loan by a lender of a security under a securities lending arrangement shall be deemed not to be a disposition of the security and the security shall be deemed to continue to be property of the lender and, for the purposes of this subsection, a security shall be deemed to include an identical security that has been transferred or returned to the lender under the arrangement.
Marginal note:Disposition of right
(3)Where, at any time, a lender receives property (other than an identical security or an amount deemed by subsection 260(4) to have been received as proceeds of disposition) in satisfaction of or in exchange for the lender’s right under a securities lending arrangement to receive the transfer or return of an identical security, for the purposes of this Act the lender shall be deemed to have disposed at that time of the security that was transferred or lent for proceeds of disposition equal to the fair market value of the property received for the disposition of the right (other than any portion thereof that is deemed to have been received by the lender as a taxable dividend), except that section 51, 85.1, 86 or 87, as the case may be, shall apply in computing the income of the lender with respect to any such disposition as if the security transferred or lent had continued to be the lender’s property and the lender had received the property directly.
Marginal note:Idem
(4)Where, at any time, it may reasonably be considered that a lender would have received proceeds of disposition for a security that was transferred or lent under a securities lending arrangement, if the security had not been transferred or lent, the lender shall be deemed to have disposed of the security at that time for those proceeds of disposition.
Marginal note:Where subsection (5.1) applies
(5)Subsection (5.1) applies to a taxpayer for a taxation year in respect of a particular amount (other than an amount received as proceeds of disposition or an amount received by a person under an arrangement where it may reasonably be considered that one of the main reasons for the person entering into the arrangement was to enable the person to receive an SLA compensation payment pursuant to a securities lending arrangement, or a dealer compensation payment, that would be deductible in computing the taxable income, or not included in computing the income, for any taxation year of the person) received by the taxpayer in the taxation year
(a)as an SLA compensation payment,
(i)from a person resident in Canada, or
(ii)from a non-resident person who paid the particular amount in the course of carrying on business in Canada through a permanent establishment as defined by regulation; or
(b)as a dealer compensation payment.
Marginal note:Deemed character of compensation payments
(5.1)If this subsection applies in respect of a particular amount received by a taxpayer in a taxation year as an SLA compensation payment or as a dealer compensation payment, the particular amount is deemed, to the extent of the underlying payment to which the amount relates, to have been received by the taxpayer in the taxation year as,
(a)where the underlying payment is a taxable dividend paid on a share of the capital stock of a public corporation (other than an underlying payment to which paragraph (b) applies), a taxable dividend on the share and, if subsection (1.1) applies to the particular amount, an eligible dividend on the share;
(b)where the underlying payment is paid by a trust on a qualified trust unit issued by the trust,
(i)an amount of the trust’s income that was, to the extent that subsection 104(13) applied to the underlying payment,
(A)paid by the trust to the taxpayer as a beneficiary under the trust, and
(B)designated by the trust in respect of the taxpayer to the extent of a valid designation, if any, by the trust under this Act in respect of the recipient of the underlying payment, and
(ii)to the extent that the underlying payment is a distribution of a property from the trust, a distribution of that property from the trust; or
(c)in any other case, interest.
Marginal note:Deductibility
(6)In computing the income of a taxpayer under Part I from a business or property for a taxation year, there may be deducted a particular amount, paid by the taxpayer in the year as an SLA compensation payment or as a dealer compensation payment, that is equal to
(a)if the taxpayer is a registered securities dealer and the particular amount is deemed by subsection (5.1) to have been received as a taxable dividend, no more than 2/3 of the particular amount (unless, for greater certainty, the particular amount is an amount for which a deduction in computing income may be claimed under subsection (6.1) by the taxpayer); or
(b)if the particular amount is in respect of an amount other than an amount that is, or is deemed by subsection (5.1) to have been, received as a taxable dividend,
(i)where the taxpayer disposes of the borrowed security and includes the gain or loss, if any, from the disposition in computing its income from a business, the particular amount, or
(ii)in any other case, the lesser of
(A)the particular amount, and
(B)the amount, if any, in respect of the security distribution to which the SLA compensation payment or dealer compensation payment relates that is included in computing the income, and not deducted in computing the taxable income, for any taxation year of the taxpayer or of any person to whom the taxpayer is related.
Marginal note:Deductible amount
(6.1)There may be deducted in computing a corporation’s income under Part I from a business or property for a taxation year an amount equal to the lesser of
(a)the total of all amounts each of which is an amount that the corporation becomes obligated in the taxation year to pay to another person under an arrangement described in paragraph (b) of the definitiondividend rental arrangementin subsection 248(1) that, if paid, would be deemed by subsection (5.1) to have been received by another person as a taxable dividend, and
(b)the amount of the dividends received by the corporation under the arrangement that were identified in its return of income under Part I for the year as an amount in respect of which no amount was deductible because of subsection 112(2.3) in computing the taxpayer’s taxable income or taxable income earned in Canada.
Marginal note:Dividend refund
(7)For the purpose of section 129, if a corporation pays an amount for which no deduction in computing the corporation’s income may be claimed under subsection (6.1) and subsection (5.1) deems the amount to have been received by another person as a taxable dividend,
(a)the corporation is deemed to have paid the amount as a taxable dividend, where the corporation is not a registered securities dealer; and
(b)the corporation is deemed to have paid 1/3 of the amount as a taxable dividend, where the corporation is a registered securities dealer.
Marginal note:Non-resident withholding tax
(8)For the purpose of Part XIII, any amount paid or credited under a securities lending arrangement or a specified securities lending arrangement by or on behalf of the borrower to the lender
(a)as an SLA compensation payment in respect of a security that is not a qualified trust unit is, subject to paragraph (c), deemed
(i)to the extent of the amount of the interest paid in respect of the security, to be a payment made by the borrower to the lender of interest, and
(ii)to the extent of the amount of the dividend paid in respect of the security, to be a payment made by the borrower, as a corporation, to the lender of a dividend payable on the security;
(b)as an SLA compensation payment in respect of a security that is a qualified trust unit, is deemed, to the extent of the amount of the underlying payment to which the SLA compensation payment relates, to be an amount paid by the trust and having the same character and composition as the underlying payment;
(c)as an SLA compensation payment is deemed to be a payment of interest made by the borrower to the lender, if
(i)the security that is transferred or lent to the borrower under the arrangement is a share of a class of the capital stock of a non-resident corporation,
(ii)the borrower and the lender are not dealing at arm’s length, and
(iii)the arrangement is not a fully collateralized arrangement; and
(d)as, on account of, in lieu of payment of or in satisfaction of, a fee for the use of the security is deemed to be a payment of interest made by the borrower to the lender.
Marginal note:Deemed fee for borrowed security
(8.1)For the purpose of paragraph (8)(d), if under a securities lending arrangement or a specified securities lending arrangement the borrower has at any time provided the lender with money, either as collateral or consideration for the security, and the borrower does not, under the arrangement, pay or credit a reasonable amount to the lender as, on account of, in lieu of payment of or in satisfaction of, a fee for the use of the security, the borrower is deemed to have, at the time that an identical or substantially identical security is or can reasonably be expected to be transferred or returned to the lender, paid to the lender under the arrangement an amount as a fee for the use of the security equal to the amount, if any, by which
(a)the interest on the money computed at the prescribed rates in effect during the term of the arrangement
exceeds
(b)the amount, if any, by which any amount that the lender pays or credits to the borrower under the arrangement exceeds the amount of the money.
Marginal note:Effect for tax treaties — interest
(8.2)In applying subparagraph (8)(a)(i), if a securities lending arrangement or specified securities lending arrangement is a fully collateralized arrangement, any SLA compensation payment deemed to be a payment made by the borrower to the lender of interest is deemed for the purposes of any tax treaty to be payable on the security.
Marginal note:Effect for tax treaties — dividend
(8.3)In applying subparagraph (8)(a)(ii), if the security is a share of a class of the capital stock of a corporation resident in Canada (in this subsection referred to as the “Canadian share”), for the purposes of determining the rate of tax that Canada may impose on a dividend because of the dividend article of a tax treaty,
(a)any SLA compensation payment deemed to be a payment made by the borrower to the lender of a dividend is deemed to be paid by the issuer of the Canadian share and not by the borrower;
(b)the lender is deemed to be the beneficial owner of the Canadian share; and
(c)the shares of the capital stock of the issuer owned by the lender are deemed to give it less than 10% of the votes that could be cast at an annual meeting of the shareholders of the issuer and have less than 10% of the fair market value of all of the issued and outstanding shares of the capital stock of the issuer, if
(i)the securities lending arrangement or the specified securities lending arrangement is not a fully collateralized arrangement, and
(ii)the borrower and the lender are not dealing at arm’s length.
Marginal note:Restricted financial institution
(9)For the purposes of subsection 187.3(1), where at any time a dividend is received by a restricted financial institution on a share that was last acquired before that time pursuant to an obligation of a borrower to return or transfer a share under a securities lending arrangement, an acquisition of the share under the arrangement shall be deemed at and after that time not to be an acquisition of the share.
Marginal note:Non-arm’s length compensation payment
(9.1)For the purpose of Part XIII, if the lender under a securities lending arrangement or a specified securities lending arrangement is not dealing at arm’s length with either the borrower under the arrangement or the issuer of the security that is transferred or lent under the arrangement, or both, and subsection (8) deems an amount to be a payment of interest by a person to the lender, the lender is deemed, in respect of that payment, not to be dealing at arm’s length with that person.
Marginal note:Partnerships
(10)For the purpose of this section,
(a)a person includes a partnership; and
(b)a partnership is deemed to be a registered securities dealer if each member of the partnership is a registered securities dealer.
Marginal note:Corporate members of partnerships
(11)A corporation that is, in a taxation year, a member of a partnership is deemed
(a)for the purpose of applying subsection (5) in respect of the taxation year,
(i)to receive its specified proportion, for each fiscal period of the partnership that ends in the taxation year, of each amount received by the partnership in that fiscal period, and
(ii)in respect of the receipt of its specified proportion of that amount, to be the same person as the partnership;
(b)for the purpose of applying paragraph (6.1)(a) in respect of the taxation year, to become obligated to pay its specified proportion, for each fiscal period of the partnership that ends in the taxation year, of the amount the partnership becomes, in that fiscal period, obligated to pay to another person under the arrangement described in that paragraph; and
(c)for the purpose of applying section 129 in respect of the taxation year, to have paid
(i)if the partnership is not a registered securities dealer, the corporation’s specified proportion, for each fiscal period of the partnership that ends in the taxation year, of each amount paid by the partnership (other than an amount for which a deduction in computing income may be claimed under subsection (6.1) by the corporation), and
(ii)if the partnership is a registered securities dealer, 1/3 of the corporation’s specified proportion, for each fiscal period of the partnership that ends in the taxation year, of each amount paid by the partnership (other than an amount for which a deduction in computing income may be claimed under subsection (6.1) by the corporation).
Marginal note:Individual members of partnerships
(12)An individual that is, in a taxation year, a member of a partnership is deemed
(a)for the purpose of applying subsection (5) in respect of the taxation year,
(i)to receive the individual’s specified proportion, for each fiscal period of the partnership that ends in the taxation year, of each amount received by the partnership in that fiscal period, and
(ii)in respect of the receipt of the individual’s specified proportion of that amount, to be the same person as the partnership; and
(b)for the purpose of subsection 82(1), to have paid the individual’s specified proportion, for each fiscal period of the partnership that ends in the year, of each amount paid by the partnership in that fiscal period that is deemed by subsection (5.1) to have been received by another person as a taxable dividend.
Marginal note:Definitions
261(1)The following definitions apply in this section.
Canadian currency yearof a taxpayer means a taxation year that precedes the first functional currency year of the taxpayer. (année de déclaration en monnaie canadienne)
Canadian tax resultsof a taxpayer for a taxation year means
(a)the amount of the income, taxable income or taxable income earned in Canada of the taxpayer for the taxation year;
(b)the amount (other than an amount payable on behalf of another person under subsection 153(1) or section 215) of tax or other amount payable under this Act by the taxpayer in respect of the taxation year;
(c)the amount (other than an amount refundable on behalf of another person in respect of amounts payable on behalf of that person under subsection 153(1) or section 215) of tax or other amount refundable under this Act to the taxpayer in respect of the taxation year; and
(d)any amount that is relevant in determining the amounts described in respect of the taxpayer under paragraphs (a) to (c). (résultats fiscaux canadiens)
elected functional currencyof a taxpayer means the currency of a country other than Canada that was the functional currency of the taxpayer for its first taxation year in respect of which it made an election under paragraph (3)(b). (monnaie fonctionnelle choisie)
functional currencyof a taxpayer for a taxation year means the currency of a country other than Canada if that currency is, throughout the taxation year,
(a)a qualifying currency; and
(b)the primary currency in which the taxpayer maintains its records and books of account for financial reporting purposes. (monnaie fonctionnelle)
functional currency yearof a taxpayer means a taxation year in respect of which subsection (5) applies to the taxpayer. (année de déclaration en monnaie fonctionnelle)
pre-reversion debtof a taxpayer means a debt obligation of the taxpayer that was issued by the taxpayer before the beginning of the taxpayer’s first reversionary year. (créance pré-rétablissement)
pre-transition debtof a taxpayer means a debt obligation of the taxpayer that was issued by the taxpayer before the beginning of the taxpayer’s first functional currency year. (créance pré-transition)
qualifying currencyat any time means each of
(a)the currency of the United States of America;
(b)the currency of the European Monetary Union;
(c)the currency of the United Kingdom;
(d)the currency of Australia; and
(e)a prescribed currency. (monnaie admissible)
relevant spot rate, for a particular day, means, in respect of a conversion of an amount from a particular currency to another currency,
(a)if the particular currency or the other currency is Canadian currency, the rate quoted by the Bank of Canada on the particular day (or, if the Bank of Canada ordinarily quotes such a rate, but there is no such rate quoted for the particular day, the closest preceding day for which such a rate is quoted) for the exchange of the particular currency for the other currency, or, in applying paragraphs (2)(b) and (5)(c), another rate of exchange that is acceptable to the Minister; and
(b)if neither the particular currency nor the other currency is Canadian currency, the rate — calculated by reference to the rates quoted by the Bank of Canada on the particular day (or, if the Bank of Canada ordinarily quotes such rates, but either of such rates is not quoted for the particular day, the closest preceding day for which both such rates are quoted) for the exchange of Canadian currency for each of those currencies — for the exchange of the particular currency for the other currency, or, in applying paragraphs (2)(b) and (5)(c), another rate of exchange that is acceptable to the Minister. (taux de change au comptant)
reversionary yearof a taxpayer means a taxation year that begins after the last functional currency year of the taxpayer. (année de rétablissement)
tax reporting currencyof a taxpayer for a taxation year, and at any time in the taxation year, means the currency in which the taxpayer’s Canadian tax results for the taxation year are to be determined. (monnaie de déclaration)
Marginal note:Canadian currency requirement
(2)In determining the Canadian tax results of a taxpayer for a particular taxation year,
(a)subject to this section, other than this subsection, Canadian currency is to be used; and
(b)subject to this section, other than this subsection, subsections 20(14.2) and 79(7) and paragraphs 80(2)(k) and 142.7(8)(b), if a particular amount that is relevant in computing those Canadian tax results is expressed in a currency other than Canadian currency, the particular amount is to be converted to an amount expressed in Canadian currency using the relevant spot rate for the day on which the particular amount arose.
Marginal note:Application of subsection (5)
(3)Subsection (5) applies to a taxpayer in respect of a particular taxation year if
(a)the taxpayer is, throughout the particular taxation year, a corporation (other than an investment corporation, a mortgage investment corporation or a mutual fund corporation) resident in Canada;
(b)the taxpayer has elected that subsection (5) apply to the taxpayer and has filed that election with the Minister in prescribed form and manner on or before the day that is 60 days after the first day of the particular taxation year;
(c)there is a functional currency of the taxpayer for the first taxation year of the taxpayer in respect of which subsection (5) would, if this subsection were read without reference to this paragraph, apply;
(d)the taxpayer has not filed another election under paragraph (b); and
(e)a revocation by the taxpayer under subsection (4) does not apply to the particular taxation year.
Marginal note:Revocation of election
(4)A taxpayer may revoke its election under paragraph (3)(b) by filing, on a day that is in a functional currency year of the taxpayer (other than its first functional currency year), a notice of revocation in prescribed form and manner