Shaw-Almex Industries Limited v. The Queen, 2009 DTC 1377 [at at 2080], 2009 TCC 538 -- summary under Capital Loss v. Loss

The taxpayer obtained a guarantee of the obligations of a US-resident sister corporation ("Fusion") to a US bank for the purpose for the purpose of capitalizing Fusion's operations. Accordingly, when it agreed to repay the loan to Fusion when Fusion became insolvent and the guarantee otherwise would have been called (which would have adversely affected the taxpayer's with the guarantor), the resulting loss to it was a capital loss. The principle (at para. 36) that "if payment under the guarantee is made for income-producing purposes related to the taxpayer's own business and not that of the corporation for which it repays the loan, then the expense may be treated as being on income account" did not apply.