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:
Does the position stated in file E9704665 still reflect the Department's position that the NASDAQ "Over-the-Counter Bulletin Board" is not a prescribed exchange under subparagraph 3201(o)(viii) of the Income Tax Regulations?
Position:
Yes.
Reasons:
The NASDAQ "Over-the-Counter Bulletin Board" is not included under paragraph viii.
XXXXXXXXXX 1999-001163
W. C. Harding
Attention XXXXXXXXXX
January 24, 2000
Dear Sirs:
Re: The NASDAQ "Over-the-Counter Bulletin Board
and Qualified Investments for Registered Plans
This is in reply to your facsimile of November 26, 1999, in which you asked if the position stated in our letter of March 7, 1997 (our file E9704665), still reflected the Department's position that the NASDAQ "Over-the-Counter Bulletin Board" is not a prescribed exchange under subparagraph 3201(o)(viii) of the Income Tax Regulations.
As stated in the above-noted letter, based upon the information provided in the corporate description of the National Association of Securities Dealers, Inc. ("NAS Inc."), the Over-the-Counter Bulletin Board is an electronic, screen-based market for securities that are not listed on the NASDAQ stock exchange, the New York Stock Exchange or the American Stock Exchange.
Subparagraph 3201(o)(viii) of the Income Tax Regulations (the "Regulations") prescribes the "National Association of Securities Dealers Automated Quotation System" ("NASDAQ") as a qualified stock exchange for the purposes of paragraph 13(27)(f) and sections 149.1, 204, 206.1 and 207.5 of the Income Tax Act (the "Act") and of the definition of "grandfathered share" in subsection 248(1) of the Act. The February 9, 1989 Regulatory Impact Analysis Statement states that the NASDAQ was added to the list of prescribed foreign stock exchanges because the listing requirements for NASDAQ are similar to those of conventional stock exchanges and, as a result, a NASDAQ listed security will be given the same sort of protection as investments in conventional stock exchanges.
Since the provisions of section 3201 of the Regulations refer specifically to stock exchanges in countries other than Canada, we are of the view that paragraph 3201(o)(viii) of the Regulations should be restricted to the NASDAQ stock exchange. We can find no support for including the various other markets affiliated with NAS Inc. in the list of prescribed stock exchanges outside of Canada. Consequently, we would not consider the Over-the-Counter Bulletin Board as a prescribed stock exchange for the purposes of section 3201 of the Regulations.
We trust the above comments will be of assistance to you.
Yours truly,
P. Spice
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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