New And Improved Functional Currency Proposals - Tax Topics

On November 10, 2008, the Department of Finance released draft legislation to amend the recently enacted functional currency rules in section 261 of the Income Tax Act (Canada) (the ''Act''). The proposed amendments follow from the Finance press release of June 27, 2008, which first announced the most significant of the intended changes. Among other things, that press release extended the first deadline for electing into the functional currency regime to October 31, 2008 for taxation years of Canadian corporations beginning after December 13, 2007. In an October 29, 2008 press release, that deadline was further extended to December 15, 2008. The new draft legislation incorporates this initial extended election deadline, adopts the changes first announced on June 27, 2008, and implements numerous other modifications to the functional currency regime in the course of completely rewriting section 261.