Income Tax Act — I-3.3 261
cy for its last taxation year, then, unless a predecessor corporation has filed a notice of revocation under subsection (4) on or before the day that is six months before the end of its last taxation year, (a) the new corporation formed as a result of the amalgamation is deemed to have made an election under paragraph (3)(b) and to have filed that election on the first day of its first taxation year; and (b) that elected functional currency is deemed to be the new corporation’s functional currency for its first taxation year. Anti-avoidance (18) The Canadian tax results of a corporation for any one or more taxation years shall be determined using a particular currency if (a) at any time (referred to in this subsection as the “transfer time”) one or more properties are directly or indirectly transferred (i) by the corporation to another corporation (referred to in this subsection as the “transferor” and the “transferee”, respectively), or (ii) by another corporation to the corporation (referred to in this subsection as the “transferor” and the “transferee”, respectively); (b) the transferor and the transferee are related at the transfer time or become related in the course of a series of transactions or events that includes the transfer; (c) the transfer time (i) is, or would in the absence of subsections (16) and (17) be, in a functional currency year of the transferor or the transferee and the transferor and the transferee have, or would in the absence of those subsections have, different tax reporting currencies at the transfer time, or (ii) is, or would in the absence of those subsections be, in a reversionary year of the transferor and is not in a reversionary year of the transferee; (d) it can reasonably be considered that one of the main purposes of the transfer or of any portion of a series of transactions or events that includes the transfer is to change, or to enable the changing of, the currency in which the Canadian tax results in respect of the property, or property substituted for it, for a taxation year would otherwise be determined; and (e) the Minister directs that those Canadian tax results be determined in the particular currency. Mergers (19) For the purposes of subsection (18), if one corporate entity (referred to in this subsection as the “new corporation”) is formed at a particular time by the amalgamation or other merger of two or more corporations (each of which is referred to in this subsection as a “predecessor corporation”), (a) the predecessor corporation is deemed to have transferred to the new corporation at the time (referred to in this subsection as the “merger transfer time”) that is immediately before the particular time each property that was held at the merger transfer time by the predecessor corporation and at the particular time by the new corporation; (b) the new corporation is deemed to exist, and to be related to the predecessor corporation, at the merger transfer time; and (c) the new corporation is deemed to have as its tax reporting currency at the merger transfer time its tax reporting currency at the particular time. Application of subsection (21) (20) Subsection (21) applies in determining a taxpayer’s income, gain or loss for a taxation year in respect of a transaction (referred to in this subsection and subsection (21) as a “specified transaction”) if (a) the specified transaction was entered into, directly or indirectly, at any time by the taxpayer and a person (referred to in this subsection as the “related person”) to which the taxpayer is at that time related; (b) the taxpayer and the related person had different tax reporting currencies at any time during the period (referred to in this subsection as the “accrual period”) in which the income, gain or loss accrued; and (c) it would, in the absence of this subsection and subsection (21), be reasonable to consider that a fluctuation at any time in the accrual period in the value of the taxpayer’s tax reporting currency relativ