See the spot hedge: time for Revenue Canada to catch up with accounting practice

New and varied financial instruments have complicated tax accounting in Canada, and a lack of specific laws and guidelines have compounded the problem. The effectiveness of hedges is questionable due to the uncertainties concerning their tax treatment. The vagueries of Canada's Income Tax Act make it hard to diferrentiate between capital gains and losses and income gains and losses, leaving open the possibility that hedges will not be given the same tax treatment as the underlying transactions.