The taxpayer purchased assets (including depreciable assets) on February 1, 1962 for a purchase price which was satisfied, in part, by the delivery of four interest bearing promissory notes payable in U.S. funds one, two, three and four years after the date of purchase. The taxpayer sought to deduct CCA on the basis of the exchange rate on December 31, 1962 (Cdn. $1.08108 per U.S. $1.00) rather than the rate on February 1, 1962 (Cdn. $1.049062 per U.S. $1.00).
The submission of taxpayer's counsel that because foreign exchange fluctuations are considered to be part of the cost of purchasing inventory, they must also form part of the cost of purchasing any asset, was rejected. "[T]he expression 'capital cost to the taxpayer' as used in [s.20(1)(a)] refers to the actual, factual, or historical cost to the appellant of the depreciable property when acquired: in this case, at February 1, 1962."