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 shares listed on NASDAQ over-the-counter exchange qualified investments for an RRSP
Position: Question of fact. The over-the-counter exchanges are not prescribed stock exchanges however there are other ways a share can be a qualified investment for an RRSP
Reasons: The over-the-counter exchanges are not prescribed stock exchanges, however shares of a public corporation as described in subparagraph 89(1)(g) are.
XXXXXXXXXX 2000-005047
M. P. Baldwin
November 9, 2000
Dear XXXXXXXXXX:
Re: Eligibility of Over-the-Counter Shares for an RRSP
This is in reply to your letter of October 5, 2000 requesting our views as to whether a share of a corporation acquired on the NASDAQ over-the-counter exchange would be a qualified investment for a registered retirement savings plan ("RRSP").
In your letter you have outlined an actual fact situation related to a completed transaction. As noted in Information Circular 70-6R3 (information circulars and interpretation bulletins are available at your local tax services office or on the Internet at www.ccra-adrc.gc.ca/formspubs/menu-e.html), this directorate can only provide advance income tax rulings in respect of specific proposed transactions. We must advise you that the review of completed transactions falls within the responsibility of tax services offices. Consequently, we can only provide you with the following general comments.
As noted in paragraph 5 of Interpretation Bulletin IT-320R2 "Shares listed on prescribed stock exchanges in Canada or in a foreign country are qualified investments under subparagraphs 204(e)(iv) and (ix). Shares of a corporation whose status is that of a public corporation within the meaning of paragraph 89(1)(g), by reason of the corporation having complied with all the conditions prescribed by subsection 4800(1) of the Regulations and having either elected in prescribed manner or been designated by the Minister to be a public corporation, will also qualify even though they are not listed on a prescribed stock exchange. ..."
Sections 3200 and 3201 of the Income Tax Regulations ("Regulations") identify the prescribed stock exchanges. A share that was listed on a prescribed stock exchange but subsequently is de-listed or is suspended from trading continues to be a qualified investment, by virtue of paragraph 4900(1)(b) of the Regulations, if the corporation that issued the share was, and for so long as the corporation continues to be, a "public corporation", as defined in subsection 89(1), and the shares do not otherwise become non-qualified.
Although the National Association of Securities Dealers Automated Quotation System (NASDAQ) is a prescribed stock exchange pursuant to subparagraph 3201(o)(viii) of the Regulations, its Over-the-Counter Bulletin Board facility, as well as other over-the-counter facilities or exchanges such as Canadian Over-the-Counter Automated Trading System are not prescribed stock exchanges. Accordingly, shares listed on the NASDAQ Over-the-Counter Bulletin Board are generally not qualified investments. However, as noted above, the determination of whether such a share would be a qualified investment under another provision of the Income Tax Act or Regulations is a question of fact.
However, as announced in August 2000 by the Minister of Finance in a Canada Customs and Revenue Agency fact sheet, amendments to the qualified investment rules will provide temporary relief for taxpayers who inadvertently acquired securities on the NASDAQ Over-the-Counter Bulletin Board. These changes will temporarily treat, as qualified investments, securities quoted on the NASDAQ Over-the-Counter Bulletin Board or on Pink Sheets or Yellow Sheets operated by Pink Sheets, LLC, that were acquired by a plan trust in an arm's length transaction completed before September 1, 2000. In order to provide sufficient time for taxpayers to dispose of these securities, their status as a qualified investment will continue until December 31, 2001, after which they will cease to so qualify.
We note that this transitional relief only applies to the securities described above. If your RRSP acquired shares on another "Over-the-Counter" exchange, the transitional relief will not apply.
We trust that the above comments will be of assistance to you.
Yours truly,
Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
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