For the past couple of years, it's been possible to use domain names in the .CA TLD that have accented characters.
For example, I'm working on a site called SeniorsVoice.ca / VoixdesAînés.ca.
To register this domain, the client purchased voixdesaines.ca. Once it's registered, any accented variants of those letters can only be purchased by the owner of the basic spelling.
There is some cost to this - the owner also has to pay the registrar for voixdesaînés.ca.
Because DNS doesn't use anything other than latin characters a-z / A-Z and numbers 0-9, the IDN (Internationalized Domain Name) accented characters are converted to a domain name that only uses basic characters, with a prefix of xn-- and a suffix indicating what characters are missing. Thus, voixdesaînés.ca becomes http://xn--voixdesans-j7a2d.ca/ on the fly, and the user is taken to the host of voixdesaines.ca.