Income Tax Act — I-3.3 261
d capital cost of depreciable property of a prescribed class, cumulative Canadian exploration expense (as defined in subsection 66.1(6)), cumulative Canadian development expense (as defined in subsection 66.2(5)), cumulative foreign resource expense in respect of a country other than Canada (as defined in subsection 66.21(1)) or cumulative Canadian oil and gas property expense (as defined in subsection 66.4(5)) (each of which is referred to in this paragraph as a pool amount ), and (ii) was added to or deducted from a pool amount of the taxpayer in respect of a Canadian currency year of the taxpayer; (e) an amount that has been deducted or claimed as a reserve in computing the income of the taxpayer for its last Canadian currency year; (f) an outlay or expense referred to in subsection 18(9) that was made or incurred by the taxpayer in respect of a Canadian currency year of the taxpayer, and any amount that was deducted in respect of the outlay or expense in computing the income of the taxpayer for such a year; (g) an amount that was added or deducted in computing the taxpayer’s paid-up capital in respect of a class of shares of its capital stock in a Canadian currency year of the taxpayer; and (h) any amount (other than an amount referred to in any of paragraphs (a) to (g) or any of subsections (6), (6.1) and (8)) determined under the provisions of this Act in or in respect of a Canadian currency year of the taxpayer that is relevant in determining the Canadian tax results of the taxpayer for the particular functional currency year. Converting pre-transition debts (8) In determining, at any time in a particular functional currency year of a taxpayer, the amount for which a pre-transition debt of the taxpayer (other than a pre-transition debt denominated in the taxpayer’s elected functional currency) was issued and its principal amount at the beginning of the taxpayer’s first functional currency year, (a) where the pre-transition debt is denominated in Canadian currency, those amounts are to be converted to the taxpayer’s elected functional currency using the relevant spot rate for the last day of the taxpayer’s last Canadian currency year; and (b) where the pre-transition debt is denominated in a currency (referred to in this paragraph as the “debt currency”) that is neither Canadian currency nor the taxpayer’s elected functional currency, those amounts are to be converted from the debt currency to the taxpayer’s elected functional currency using the relevant spot rate for the last day of the taxpayer’s last Canadian currency year. Pre-transition debts (9) A pre-transition debt of a taxpayer that is denominated in a currency other than the taxpayer’s elected functional currency is deemed to have been issued immediately before the taxpayer’s first functional currency year for the purposes of (a) determining the amount of the taxpayer’s income, gain or loss, for a functional currency year of the taxpayer (other than an amount that subsection (10) deems to arise), that is attributable to a fluctuation in the value of a currency; and (b) applying paragraph 80(2)(k) in respect of a functional currency year of the taxpayer. Deferred amounts relating to pre-transition debts (10) If a taxpayer has, at any time in a taxation year that is a functional currency year or a reversionary year of the taxpayer, made a particular payment on account of the principal amount of a pre-transition debt of the taxpayer: (a) where the taxpayer would have made a gain — or, if the pre-transition debt was not on account of capital, would have had income — (referred to in this paragraph as the “hypothetical gain or income”) attributable to a fluctuation in the value of a currency if the pre-transition debt had been settled by the taxpayer’s having paid, immediately before the end of its last Canadian currency year, an amount equal to the principal amount (expressed in the currency in which the pre-transition debt is denominated, which currency is referred