Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
How does RRSP trustee determine when share of public corporation is non-qualified because corporation has been wound-up.
Position:
Share does not become non-qualified investment but rather ceases to exist and cost should be written off.
Reasons: N/A
XXXXXXXXXX 952916
Attention: XXXXXXXXXX
December 13, 1996
Re: Effect of Winding-Up on Status of Shares of Public Corporation as Qualified Investments
This is in reply to your facsimile transmission of October 17, 1995, in which you ask how a trustee of a registered retirement savings plan ("RRSP") can confirm whether a corporation has been wound-up. Your question relates to shares of a public corporation and the point in time when the tax in subsection 207.1(1) of the Income Tax Act (the "Act") would apply because the shares are no longer qualified investments.
A corporation is wound-up either in accordance with the particular legislation under which it was incorporated or in accordance with the procedures for winding-up and dissolution provided by the appropriate federal or provincial companies act or winding-up act. Therefore, the requirements for notice to shareholders and the public concerning winding-up may differ depending on the statute which applies. In most cases, notification concerning the winding-up of a company is contained in government publications such as the Canada Gazette. You should be able to obtain access to these government publications through your local library or by subscribing to the particular service.
Where an RRSP holds a share and the public corporation which issued the share is no longer in existence because it has been wound-up, the share will be cancelled and the investment will no longer exist. The RRSP trustee should write-off the cost of the share at the time notice of the share's cancellation is received. In these circumstances, the share does not become non-qualified and no Part XI.1 tax will be exigible.
We trust our comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
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