I-3 - Taxation Act

Section 175.2.13 Disposition versions

2006-03-01

175.2.13. Notwithstanding any other provision of this Act, the following rules apply in respect of a particular debt of a taxpayer, other than a corporation described in any of paragraphs a, b, c and e of the definition of “specified financial institution” in section 1, that is at any time a weak currency debt:

(a)  no deduction on account of interest that accrues on the debt for any period that begins after the day that is the later of 30 June 2000 and the exchange date during which it is a weak currency debt shall exceed the amount of interest that would, if at the commitment time the taxpayer had instead incurred or assumed an equivalent amount of debt in the final currency on the same terms as the particular debt, excluding the rate of interest but including the structure of the interest calculation, such as whether the rate is fixed or floating, have accrued on the equivalent debt during that period, with those modifications that the difference in currency requires;

(b)  the amount of the taxpayer’s gain or loss, in this section and section 175.2.14 referred to as a “foreign exchange gain” or “foreign exchange loss”, for a taxation year on the settlement or extinguishment of the debt that is due to the fluctuation in the value of any currency shall be included or deducted, as the case may be, in computing the taxpayer’s income from the business or the property to which the debt relates; and

(c)  the amount of any interest on the debt that is, because of this section, not deductible is deemed, for the purpose of computing the taxpayer’s foreign exchange gain or foreign exchange loss on the settlement or extinguishment of the debt, to be an amount paid by the taxpayer to settle or extinguish the debt.

2004, c. 8, s. 32.