Tax and Revenue Administration Alberta Corporate Tax Act Special Notice Vol. 5 No. 28

Vol. 5 No. 28 / April 2009

ALBERTA CORPORATE TAX ACT SPECIAL NOTICE:
Functional Currency Tax Reporting

NOTE: This special notice is intended to explain legislation and provide specific information. Every effort has been made to ensure the contents are accurate. However, if a discrepancy should occur in interpretation between this special notice and governing legislation, the legislation takes precedence.

Generally, corporations are required to report income and file their tax returns in Canadian dollars.  Some corporations, however, maintain their books and records in a foreign currency, translating results into Canadian dollars solely for tax purposes.  In years of currency volatility, this can distort financial results. 

Effective for taxation years beginning after December 13, 2007, the federal government permits certain corporations to determine their Canadian tax results in their functional currency rather than Canadian dollars.  This change is expected to both make compliance easier and promote more representative financial reporting.

Bill 37, Alberta Corporate Tax Amendment Act, 2009, just introduced in the Alberta Legislative Assembly, proposes to deem a corporation that filed a valid federal election to have made the same election for Alberta purposes.  This ensures that the federal decision will not impose additional administrative burdens and compliance costs on Alberta corporate taxpayers.

To facilitate processing of such returns, corporations that elect, or have elected, to report in functional currency federally and file Alberta returns should send a copy of the federal election to Alberta Finance and Enterprise, Tax and Revenue Administration.