30 November 1996 Ruling 9708013 - FOREIGN PROPERTY, POOLED FUND TRUST

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:

Will subsection 104(2) apply where a pooled fund trust that currently invests only in Canadian property if it acquires foreign property within the allowed limits?

Position:

No

Reasons:

Provision not intended to apply to this situation and we have ruled previously.

XXXXXXXXXX							970801
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1997

Dear Sirs:

Re: Advance Income Tax Ruling
XXXXXXXXXX

This is in reply to your letters dated XXXXXXXXXX, wherein you requested an advance income tax ruling on behalf of the above-referenced taxpayer. We also acknowledge the information provided during our various telephone conversations (XXXXXXXXXX).

Our understanding of the facts and proposed transactions is as follows:

Facts

1.The XXXXXXXXXX (the "Salaried Plan") is a registered pension plan ("RPP") within the meaning assigned by subsection 248(1) of the Income Tax Act (Canada) (the "Act"). The Company and related corporations participate in the Salaried Plan (collectively, the "Participating Employers"). The Salaried Plan covers the eligible salaried employees of the Participating Employers.

2.The XXXXXXXXXX (the "Hourly Plan") is an RPP and covers eligible hourly employees of the Participating Employers.

3.The Company is the administrator of the Salaried Plan and the Hourly Plan (hereinafter collectively referred to as the "Plans"). XXXXXXXXXX is the custodial trustee of the funds of the Plans.

4.Monthly contributions are made when necessary by the Participating Employers to XXXXXXXXXX for each of the Plans. The investments made by the Plans are managed by designated Canadian asset managers and designated foreign asset managers. The Canadian managers invest funds of the Plans in equities, fixed income instruments, short term bills/notes, and other qualified domestic investments. The foreign managers invest in foreign property as that term is defined in subsection 206(1) of the Act ("Foreign Property").

5.In accordance with the proposed transactions described in advance income tax ruling XXXXXXXXXX dated XXXXXXXXXX, four trusts were established by the XXXXXXXXXX. Two trusts were established to manage and administer foreign investments which constitute Foreign Property, one on behalf of the Salaried Plan and the other on behalf of the Hourly Plan (hereinafter collectively referred to as the "Foreign Property Trusts"). Two trusts were established to manage and administer all assets other than Foreign Property, one on behalf of the Salaried Plan and the other on behalf of the Hourly Plan (hereinafter collectively referred to as the "Domestic Property Trusts"). The Domestic Property Trusts have never acquired any Foreign Property.

6.Each of the Domestic Property Trusts is a "pooled fund trust" within the meaning assigned by subsection 5000(7) of the Income Tax Regulations (the "Regulations").

Proposed Transactions

7.The relevant trust agreements for each of the Domestic Property Trusts will be amended in accordance with the existing terms of the particular trust agreement so as to permit the Domestic Property Trusts to hold Foreign Property.

8.The Domestic Property Trusts will acquire Foreign Property. The cost amount of the Foreign Property held by a Domestic Property Trust will not exceed XXXXXXXXXX% of the cost amount of all of the property held by the particular Domestic Property Trust.

Purpose of the Proposed Transactions

9.The purpose of the proposed transactions is to enable the Salaried Plan and the Hourly Plan to obtain the maximum benefit from investing in foreign property within the limits permitted under the Act and Regulations.

Additional Information

10.To the best of your knowledge and the knowledge of the Company, none of the issues involved in this ruling request is being considered by a tax services office or a taxation centre in connection with an income tax return already filed, and none of the issues is under objection or appeal.

Rulings Given

Provided that the statement of facts and proposed transactions are correct and constitute a complete disclosure of all the relevant facts and proposed transactions and that the proposed transactions are completed in the manner described herein, we rule as follows:

A.As a result, in and by themselves, of the proposed transactions, the Minister will not designate, pursuant to subsection 104(2) of the Act, the XXXXXXXXXX to be, in respect of the Salaried Plan or the Hourly Plan, an individual whose property is the property of both the Foreign Property Trust and the Domestic Property Trust and whose income is the income of both the Foreign Property Trust and the Domestic Property Trust.

The above ruling, which is based on the Act in its present form and does not take into account any proposed amendments thereto, is given subject to the general limitations and qualifications set out in Information Circular 70-6R3 dated December 30, 1996, and is binding on Revenue Canada provided that proposed transactions are completed within six months of the date of this letter.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch