| 19(1) | File No. 5-8747 |
| Clayton C. Robb | |
| (613) 957-2744 |
November 7, 1989
19(1)
Re: Foreign Exchange Gain or Loss
This is in reply to your letter dated September 28, 1989 in which you requested an opinion on the nature of a potential foreign exchange gain or loss. The gain or loss would result from a forward exchange contract with a non-Canadian related company.
The facts described in your letter appear to relate to a specific proposed transaction. Accordingly, your query should take the form of a request for an advance income tax ruling. We do, however, offer the following comments.
The income tax consequences of the forward exchange would normally be determined in conjunction with the underlying transaction to which the hedge relates. Therefore, the foreign exchange gain or loss will have the same character as the underlying loan transaction.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate