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:
Will units of the Real Assets U.S. Social Equity Pooled Fund be a qualified investment for an RRSP?
Position: Question of fact.
Reasons: No information provided in respect of the fund.
XXXXXXXXXX 2001-010203
M. P. Sarazin, CA
February 14, 2002
Dear XXXXXXXXXX:
Re: XXXXXXXXXX and Qualified Investment for an RRSP
This is in reply to your letter of September 11, 2001, requesting our views as to whether a unit of the XXXXXXXXXX would be a "qualified investment" for a registered retirement savings plan ("RRSP") within the meaning assigned by subsection 146(1) of the Income Tax Act (the "Act"). We apologize for the delay in responding to your letter.
XXXXXXXXXX
The kinds of property that constitute qualified investments for an RRSP are described in subsection 146(1) of the Act and section 4900 of the Income Tax Regulations (the "Regulations"). The Canada Customs and Revenue Agency describes the kinds of property that constitute qualified investments for RRSPs in its latest version of Interpretation Bulletin IT-320 currently entitled "Registered retirement savings plans - Qualified investments" which is 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.
The determination of whether a specific investment is a "qualified investment" is a question of fact. Since you have not provided any information with respect to the units of the XXXXXXXXXX we can only provide the following general comments.
Units of a mutual fund trust that is resident in Canada are qualified investments pursuant to paragraph 4900(1)(d) of the Regulations and units of a unit trust that is resident in Canada that satisfy certain conditions are qualified investments pursuant to paragraph 4900(1)(d.2) of the Regulations. A mutual fund trust is defined in subsection 132(6) of the Act and a unit trust is defined in subsection 108(2) of the Act. Since you are probably dealing with a U.S. trust, it is very unlikely that the above fund would qualify under either of paragraphs 4900(1)(d) or (d.2) of the Regulations.
Under paragraph 4900(1)(n.1) of the Regulations, a unit of a trust will be a qualified investment where the trust satisfies the following conditions:
? the units of the trust are listed on a stock exchange referred to in section 3201 of the Regulations;
? the primary purpose of the particular trust is
? to hold securities included in a stock exchange index (including a stock exchange index reflecting securities issued by corporations or other entities carrying on a particular type of business activity) in substantially the same portion as those securities are reflected in that index, or
? to invest in a manner that causes the investment performance of the particular trust to replicate the investment performance of that index, and
? at the time the unit of the trust is acquired, the total of all amounts each of which is the cost amount to the particular trust of a share of the capital stock of a corporation listed on a single stock exchange referred to in sections 3200 or 3201 of the Regulations is not less than 80% of the total of all amounts each of which is the cost amount to the particular trust of a property of the particular trust.
Under paragraph 4900(1)(n.1) of the Regulations, qualifying units include Standard & Poor 500 Depositary Receipts (known as SPDRs), units valued on the basis of the Dow Jones Industrial Average (known as DIAMONDs) and units for a particular country (known as WEBs) valued on the basis of the Morgan Stanley Capital Investment Index.
We trust these comments will be of assistance.
Yours truly,
Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
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