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Tax Memo: Functional Currency: Proposed Election
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On October 2, 2007, Canada’s federal government released legislative proposals to enact certain tax measures first announced in its 2006 budget.
Proposed subsection 261(2) confirms that, for all taxation years, the amount of income, taxable income, and taxes payable by a taxpayer under the Income Tax Act (the Act) are to be determined in Canadian dollars. However, proposed subsections 261(3) and (4) will permit certain corporations resident in Canada to elect to determine their Canadian tax amounts in the corporation’s “functional currency.” The election will be available for taxation years that begin on or after the date the proposal receives royal assent.
