Page 7 - Chapter 22 - Foreign Exchange (Cont.)

foreign exchange gain or
Exchange Item foreign exchange loss i.r.o

an exchange item during
any year of assessment

 S 24 I is applicable to exchange differences on exchange items

 Exchange item =

 Unit of currency

dollar notes

 Loan, advance or debt granted to or by the person

Invoiced in foreign currency

 Forward exchange contract

Agreement to exchange amount of currency for another

currency at future date @ specified exchange rate

Can be used as hedging instrument in order to protect

(“hedge”) the entity against unfavourable movement in the

exchange rate

Ignore references to permanent establishment and headquarter co’s for 3rd yr purposes