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: For purposes of 4900(1)(d.1) of the Regulations, will a mutual fund trust qualify where only a single class of its units are listed on a prescribed stock exchange?
Position: Yes.
Reasons: This interpretation would treat public corporations and mutual fund trusts that have a class of shares or units that trade on a prescribed stock exchange equally.
XXXXXXXXXX 2000-005436
M. P. Sarazin
Attention: XXXXXXXXXX
December 4, 2000
Dear Sirs:
Re: Paragraph 4900(1)(d.1) of the Income Tax Regulations (the "Regulations")
This is in reply to your letter of November 2, 2000, requesting confirmation that debentures of a mutual fund trust will qualify under paragraph 4900(1)(d.1) of the Regulations where the mutual fund trust has a class of units that are listed on a stock exchange referred to in section 3200 of the Regulations.
You are of the view that paragraph 4900(1)(d.1) of the Regulations does not require that all of the classes of units of the mutual fund trust be traded on a stock exchange referred to in section 3200 of the Regulations. You have noted that under subsection 89(1) of the Income Tax Act, a corporation only has to have a class of its shares trade on a prescribed stock exchange in order to qualify as a public corporation and, under section 4801 of the Regulations, a mutual fund trust is only required to have a class of the units of the trust qualify for distribution to the public. Since debts of a public corporation that only has one class of shares that trade on a prescribed stock exchange will be a qualified investment under paragraph 4900(1)(c.1) of the Regulations, it must have been intended that debts of a mutual fund trust with one class of units that trade on a prescribed stock exchange will also be a qualified investment under paragraph 4900(1)(d.1) of the Regulations. To conclude otherwise, public corporations would be treated differently than mutual fund trusts which does not appear to be the intent of the particular provisions.
We agree with the views expressed above. A bond, debenture, note or similar obligation issued by a mutual fund trust which has a class of units that trade on a prescribed stock exchange should qualify under paragraph 4900(1)(d.1) of the Regulations.
We trust that our comments will be of assistance.
Yours truly,
Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
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