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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Where a corporation is restricted in its dealings with respect to securities in certain provinces, but is not so restricted other provinces, is the company a "registered securities dealer" for the purposes of the ITA.
Position: Yes.
Reasons: Legislation
November 29, 2001
TORONTO NORTH TSO HEADQUARTERS
Industry Special Services K. Cooper
(613) 957-8984
Attention: Doug Mitchell, Banking Specialist
2001-009226
Registered Securities Dealers
This in partial reply to your request of August 29, 2001 for clarification of the interpretation of the definition of "registered securities dealer" in subsection 248(1) of the Income Tax Act (ITA). As we explained, a detailed determination of whether a particular class of securities license under particular provincial legislation will qualify for the purposes of the ITA will follow at a later date. We are, however, in a position to provide you with a response to the general interpretive question.
Facts
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Issue
Where a corporation is restricted in its dealings with respect to securities in certain provinces, but is not so restricted other provinces, is the company a "registered securities dealer" for the purposes of subsection 248(1) of the ITA?
The regulation of securities themselves and the entities involved in the securities business in Canada is a matter of provincial jurisdiction. As in this instance, it may not be uncommon that a company could be authorized under provincial security laws to deal in securities without any restrictions in some provinces, while in others there may be limitations. We agree with your view that provided the corporation is licensed to deal in securities in one of the provinces without restriction, it would meet the ITA's definition of a "registered securities dealer." The Department of Finance has informally advised that this interpretation is consistent with the policy intent of the legislation.
For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Legislation Access Database (LAD) on the Agency's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version, or they may request a copy severed using the Privacy Act criteria, which does not remove client identity. Requests for this latter version should be made by you to Jackie Page at 613 957-0682. A copy will be sent to you for delivery to the client.
If you require any additional information or assistance please contact Karen Cooper at 957-8984.
F. Lee Workman
Manager
Financial Institutions Section
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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