In connection with noting that BMO had treated an FX loss on shares not to be a loss from their disposition because the loss was deemed by s. 39(2) to be from the disposition of foreign currency, Webb JA noted that Novopharm had stated that a “deeming provision is a statutory fiction that replaces or modifies reality; it cannot be ignored” and then stated (at para. 40):
The deeming provision in subsection 39(2) of the ITA in BMO altered reality by deeming the loss realized by the Bank of Montreal (of which there was only one loss in issue) to be a capital loss from the disposition of foreign currency.