A corporation resident in Canada may elect to compute its income for Canadian tax purposes in a currency (the Functional Currency) other than the Canadian dollar: s. 261(3)(b).  In 2016-0633981E5, the CRA confirmed its view that no gain or loss will arise solely by virtue of making the Functional Currency election (see page 8).  The question arose in the context of a Canadian corporation that had maintained its financial statements in the Functional Currency before making the Functional Currency election.  The CRA said that making the Functional Currency election in these circumstances will in most cases result in ongoing differences between: (1) the amounts shown in the electing corporation’s historical Functional Currency financial statements, and (2) the Functional Currency amounts that are relevant for computing the electing corporation’s taxable income going forward (as a result of the Functional Currency election).  The existence of this historical difference – i.e., between financial accounting and tax – does not mean that the electing corporation will incur a loss or realize a gain, for tax purposes, on making the Functional Currency election (see page 7).