2007-0246461R3 concerned a monetization contract (the "Term Contract") of Holdco A and Holdco X with a Canadian financial institution (“FI”) under which they each had an obligation to make a payment to FI if the closing price of their referenced Class A Shares of of a Canadian public company was higher than the benchmark price on the settlement date, and with a correlative obligation of FI to make a payment on the settlement date if such closing price was lower. In commenting on this ruling, CRA stated:
It is important to note that in ruling F...the CRA did not state that the loss that would result from the settlement of the obligations of a corporation under the forward contract, in the event of an increase in the value of the monetized shares, would constitute in and by itself a capital loss. In such a situation, it appears to us that this loss would not technically constitute a capital loss under the provisions of the ITA solely by reason of the settlement of the forward contract.