Words and Phrases - "currency"
19 January 2024 External T.I. 2020-0865921E5 F - Foreign Currency dispositions by an individual
Does s. 39(1.1), which applies to dispositions by an individual of foreign currency banknotes or coins, extend to dispositions of foreign currency held by an individual on deposit at a financial institution? CRA noted that in 2020-0868031I7:
Based on a textual, contextual and purposive interpretation of subsection 39(1.1), we concluded that the phrase “dispositions of currency other than Canadian currency” in that subsection includes dispositions of foreign currency held by an individual in a chequing or current deposit account at a financial institution, to the extent that the individual is entitled to withdraw the currency on deposit at any time, convert it into another currency at any time, or use it to make a purchase or a payment at any time.
27 October 2023 Internal T.I. 2020-0868031I7 - Disposition of Foreign Currency
Regarding whether s. 39(1.1) did not extend (as indicated in 2017-0712621C6 F) to dispositions of foreign currencies held on deposit at a financial institution by an individual rather than being restricted to bills or coins, CRA noted that, in addition to a more technical meaning, “currency” also could refer “simply to ‘money’ that is used in a country, with the definition of ‘money’ including sums in a bank account,” and that “it is relevant to consider that subsection 39(1.1) does not apply to a specialized audience,” e.g., it could apply to an individual “using foreign currency on a holiday in a foreign country,” the Directorate stated:
[I]n the context of subsection 39(1.1), the phrase “dispositions of currency other than Canadian currency” includes situations where foreign currency funds in a chequing or current deposit account, which entitles the depositor to withdraw the currency on deposit at any time, are converted into another currency or used to make a purchase or a payment.
Where s, 39(1.1) did not apply to a disposition of capital property, s. 39(1) would apply (and not s. 39(2), which applies to FX-denominated obligations).