Functional currency

A corporation resident in Canada throughout the tax year can elect to report in a functional currency for tax years that begin on or after December 14, 2007. Functional currency is the currency of a country other than Canada and is the primary currency in which the corporation maintains its records for financial reporting. Presently, qualifying currencies are the U.S. dollar, the Australian dollar, the British pound, and the euro. For more information, see section 261 of the Income Tax Act.

You can elect to report in a functional currency if you meet the following conditions:

• the corporation is not an investment corporation, a mortgage investment corporation, or a mutual fund corporation;
• there is a functional currency for the first tax year to which the election applies;
• you have not filed or revoked a previous election to report in a functional currency; and
• you must file the election at least six months before the end of the tax year to which the election applies.

Forms and publications

• Form T1296, Election, or Revocation of an Election, to Report in a Functional Currency