http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/143104/index.do
Korfage v. The Queen (March 22, 2016 – 2016 TCC 69, Lamarre A.C.J.).
Précis: This is an extremely esoteric case. The taxpayer was entitled to a US$12,024 exemption in 2010 on a pension received from the International Civil Aviation Organization. The entire issue before the Court was whether the rate of exchange to be applied in determining the amount of that exemption was the 2010 average exchange rate (which was used by the Minister) or an average rate for the 36 month period prior to and including September 2000 (as contended by the taxpayer). The Court concluded that the Minister’s approach was appropriate and dismissed the appeal. There was no order as to costs since this was an informal procedure appeal.
Decision: The Court accepted the Minister’s position:
[20] The deduction under subparagraph 110(1)(f)(i) of the ITA is a “Canadian tax result” under paragraphs (a) and (d) of the above definition, since it is an amount that is relevant in computing the Appellant’s taxable income for the 2010 taxation year. The “particular amount” referred to in paragraph 261(2)(b) of the ITA is the amount that is exempt from Canadian taxation pursuant to paragraph 1 of Article XVIII of the Treaty, which is also the amount that would be excluded from income in the United States if the Appellant were a resident of that country. That amount is therefore expressed in US dollars. Paragraph 261(2)(b) of the ITA requires that the exempt amount be converted into Canadian currency using the relevant spot rate for the day on which that amount (the particular amount) arose. Thus, the day on which the exempt amount arose determines the appropriate exchange rate that should be used to convert the US dollar amount into Canadian dollars.
…
[22] Having determined that the exempt amount arises on the date of receipt of each benefit payment, I conclude that the Minister’s use of the annual average exchange rate for 2010 was appropriate for converting the deductible amount. The relevant spot rate for a particular day is either the rate quoted by the Bank of Canada for noon on the particular day or another rate of exchange that is acceptable to the Minister. The Minister has discretion in the application of an appropriate exchange rate to convert the US dollar amount to Canadian dollars, and chose to use the annual average exchange rate for 2010 of 1.0562.
As a result the appeal was dismissed. There was no order as to costs since this was an informal procedure appeal.