The Queen v. Bank of Nova Scotia, 81 DTC 5115, [1981] CTC 162 (FCA) -- summary under Subsection 126(2)

The right to claim the tax credit arises in the year that the income in the foreign country is earned. To hold that the amount of the credit is not established until the date that the foreign business-income tax is required to be paid could result in the taxpayer being required to file its tax return before the amount of the credit could be accurately ascertained. In light of the above and generally accepted accounting practice, the amount of foreign business-income tax was translated, for the purpose of calculating the credit, at the weighted exchange rate that prevailed in the year that the foreign business income was earned, rather than the exchange rate that prevailed at the date of payment of the foreign tax over a year later.