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:
Will a GIC issued by a chartered Canadian bank and denominated in a foreign currency be a foreign property for purposes of Part XI of the Act?
Position: No.
Reasons:
The residency of the issuer of the GIC will determine whether a GIC is Canadian or foreign property. The currency denomination of the GIC will not result in a property being Canadian or foreign property.
XXXXXXXXXX 2001-006652
M. P. Sarazin, CA
February 6, 2001
Dear XXXXXXXXXX:
Re: Debts Denominated in Foreign Currency and Foreign Property
This is in reply to your letter of November 28, 2001, which was forwarded to us by the Shawinigan-Sud Tax Centre, requesting our views as to whether a guaranteed investment certificate ("GIC") issued by a Canadian bank and denominated in a foreign currency would constitute a foreign property for purposes of Part XI of the Income Tax Act (the "Act").
You have received conflicting information from various sources and you would like to know whether foreign denominated GICs issued by chartered Canadian banks that are held within your registered retirement savings plan ("RRSP") would be foreign property within the meaning assigned by subsection 206(1) of the Act.
Confirmation of the tax consequences associated with completed transactions are provided by the relevant tax services office. Opinions concerning proposed transactions involving specific taxpayers will only be provided in response to a request for an advance income tax ruling. For more information concerning advance tax rulings, please refer to Information Circular 70-6R4 dated January 29, 2001, issued by the Canada Customs and Revenue Agency (the "Agency"). Copies of information circulars and interpretation bulletins are available from your local tax services office or on the Internet at the following site - http://www.ccra-adrc.gc.ca/formspubs/menu-e.html. However, we can provide you with the following general comments.
The Canada Customs and Revenue Agency's general position is that a GIC is a similar obligation to bonds, debentures, notes or mortgages. As such, if issued by a chartered Canadian bank, it would be a qualified investment for an RRSP in accordance with paragraph (b) of the definition of qualified investment in subsection 146(1) of the Act. Furthermore, since the chartered Canadian bank is a resident of Canada, the GIC will not be a foreign property within the meaning of subsection 206(1) of the Act.
We trust the above comments will be of assistance to you.
Yours truly,
Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
c.c. Sylvie Bordeleau, Section 541 5-1
Shawinigan-Sud Tax Centre
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