19 September 2008 Internal T.I. 2008-0272441I7 - GUILT LOCK DERIVATIVE -- summary under Paragraph 20(1)(e)

In order to effectively lock in the interest rate on bonds to be issued by the corporation at a future date, it enters into a hedging arrangement under which, on the date of issuing the bond, it will receive or make a cash payment under a "gilt lock" hedge that reflects the change in the price of bonds between the date of entering into the hedge and the date of closing out such hedge. CRA indicated that the cost of such a hedge (if a payment was made thereunder) would not qualify as an issue expense incurred "in the course of" the borrowing.