In 2013-0481691E5, the CRA confirmed that losses realized on monthly foreign currency forward contracts were on income account, notwithstanding that they were settled and re-entered into over the same 4-year period of a foreign currency capital loan made to a related party. In the case considered, the company made a foreign currency capital loan (Loan) to a related party over a four year period. The loan was settled in the fourth year resulting in a foreign currency capital gain. For accounting reasons, the company hedged the Loan over this same 4-year period by entering into monthly foreign currency forward contracts (Contracts); the Contracts were settled and reentered into on a monthly basis, each time realizing a foreign currency loss. The CRA confirmed that forward contracts are on income account unless they can be “sufficiently linked to an underlying transaction”: Echo Bay Mines Ltd v. The Queen, Salada Foods Ltd v. The Queen, and Ontario (Minister of Finance) v. Placer Dome Canada Limited. In the event such linkage exists, the hedge contract takes on the tax character of the underlying transaction: Shell Canada Limited v The Queen. Here there was no link between the maturity dates of the Contracts and any actual or intended settlement date for the Loan. As such, the Contracts did not constitute a hedge for tax purposes: the monthly losses were on income account.