Imperial Oil Ltd. v. Canada; Inco Ltd. v. Canada, 2006 DTC 6639, 2006 SCC 46, [2006] 2 SCR 447 -- summary under Paragraph 20(1)(f)

In finding that the taxpayers were not entitled to recognize deductions under s. 20(1)(f)(ii) at the time they repaid U.S.-dollar denominated debentures following an appreciation in the U.S. dollar, LeBel J. noted that he was not convinced that the cost of dealing in foreign currency was an intrinsic cost of borrowing for the purpose of the Act in that a foreign exchange loss is a cost of borrowing only where the thing borrowed is foreign currency, and that if s. 20(1)(f) applied to foreign exchange losses, the section would operate quite differently in relation to foreign currency and Canadian dollar obligations. Conversely, s. 39, although a residual provision, was a statement of Parliament's intent to treat foreign exchange losses as capital losses.