CRA finds that a foreign partnership did not hold Bitcoins in an active business

The definition of "specified foreign property" for purposes of the foreign property reporting rule in s. 233.3 includes an interest in a (mostly foreign-owned) partnership which holds "funds or intangible property…situated, deposited or held outside Canada," but with an exclusion in para. (j) of the definition for where such property of the partnership "is used or held exclusively in the course of carrying on an active business of the…partnership."

CRA considered that the para. (j) exclusion likely did not apply for a foreign partnership that held Bitcoins and engaged in related FX hedging and arbitrage transactions.  Given that the definition of non-portfolio property (which refers only to "property...use[d]…in the course of carrying on a business in Canada") has narrower wording (i.e., merely "holding" in the course of a business is not enough to taint), this suggests that listed Canadian precious metal funds should not be considered to be SIFT trusts (or partnerships) even if they hold their property in Canada.

Neal Armstrong.  Summary of 16 April 2015 T.I. 2014-0561061E5 under s. 233.3 – "specified foreign property".