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:
Are mutual funds denominated in a foreign currency qualified investments for an RESP?
Position:
Not disqualified on that basis
Reasons:
No provisions restrict the denomination of mutual fund investments for RESPs
XXXXXXXXXX
2000-002367
Attention XXXXXXXXXX W.C. Harding
October 19, 2000
Dear Sirs:
Re: RESP Qualified Investments - Mutual Fund Interests Denominated in Foreign Currency
This is in reply to your e-mail request of May 1, 2000, in which you asked if shares or units of a Canadian mutual fund that are denominated in a foreign currency would be qualified investments for a trust governed by a registered educational savings plan (an "RESP").
Qualified investments for RESPs are defined in subsection 146.1(1) of the Income Tax Act (the "Act") and include investments that are described within that subsection, in other provisions of the Act and as prescribed under the Income Tax Regulations (the "Regulations"). In this latter respect, certain amendments to the Regulations were proposed, with effect from October 27 1998, to include a number of investments listed in section 4900 of the Regulations as prescribed investments for RESPs. However, these amendments have not been passed into law as of the date of this letter. Nevertheless, the Agency will continue its practice of accepting these investments as qualified investments for RESPs subject to the final passage of the amendments as proposed.
A share of a mutual fund corporation may be a qualified investment for an RESP under one or more provisions of the Act or the Regulations. Similarly, a unit of a mutual fund trust may be a qualified investment for an RESP under the provisions of paragraph 4900(1)(d) of the Regulations or as a "registered investment" (as defined in subsection 204.4(1) of the Act) under paragraph 4900(1)(a) of the Regulations . Each of these provisions include conditions that the particular investment must satisfy. However none of them require an investment to be denominated in Canadian currency. Accordingly, the fact that a share or unit of a mutual fund (or any other investment or obligation) is denominated in a foreign currency will not preclude that share or unit of a mutual fund from being qualified under the Act as investments for an RESP.
We trust this explanation will be of assistance to you.
Yours truly,
P. Spice
for Director
Financial Industries Division
Income Tax Rulings Directorate
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