Part 2: Corporate Federal Taxes Changes

6.  Valuation of derivatives

Certain derivatives are excluded from the inventory valuation rules while maintaining the status of such property as inventory resulting a current write-down of the value and recognize the gains at the end of the year.

Section 10 of the Income Tax Act is amended by adding the following after subsection (14):

"Derivatives
(15) For the purposes of this section, property of a taxpayer that is a swap agreement, a forward purchase or sale agreement, a forward rate agreement, a futures agreement, an option agreement, or any similar agreement is deemed not to be inventory of the taxpayer."

For more information, please contact us @ 604-639-3229 or info@theresalocpa.ca

Note:  All information relating to derivatives valuation above is available from Government of Canada website.

By Theresa Lo, CPA, CGA

October 11, 2017