Waltz v. The Queen, 2001 DTC 462 (TCC) -- summary under Section 79

The proceeds of disposition to the taxpayer (the current debtor) with respect to the foreclosure of a U.S.-dollar mortgage loan were determined by reference to the exchange rate at the time of that extinguishing rather than the exchange rate at the time the debt was assumed by the taxpayer, as argued by Revenue Canada. This approach was more normal and logical given that the proceeds of disposition would have been determined on the basis of the current exchange rate if the property had been voluntarily disposed of in satisfaction of the debt, and given that the proceeds of disposition arose at the latter time. Furthermore, in the absence of any evidence of novation, it was not appropriate for Revenue Canada to assume that the debt had been created at the time of its assumption rather than original issuance.