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 an open-ended mutual fund that invests directly in real estate be a qualified investment for an RRSP or an RRIF?
Position: Question of fact.
Reasons: Provided general information concerning mutual fund corporations and mutual fund trusts as qualified investments for an RRSP or an RRIF.
Signed on March 5, 2003
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Elinor Caplan, Minister of National Revenue, has asked me to reply to your correspondence addressed to the Honourable John Manley, Deputy Prime Minister and Minister of Finance, concerning qualified investments for a registered retirement savings plan (RRSP) and a registered retirement income fund (RRIF). Mr. Manley's office forwarded a copy of your correspondence to Minister Caplan on January 7, 2003.
In your letter, you ask if an open-ended mutual fund that invests directly in real estate will be a qualified investment for an RRSP or an RRIF. The Income Tax Act defines two types of mutual funds, a mutual fund corporation and a mutual fund trust, each of which may be a qualified investment for RRSPs and RRIFs if certain conditions are satisfied.
In order for a corporation to be considered a mutual fund corporation, it must be either a prescribed labour-sponsored venture capital corporation or a public corporation that satisfies certain conditions. A unit of a trust will be a qualified investment for an RRSP and an RRIF at a particular time if the trust is at that time a mutual fund trust. A mutual fund trust must also satisfy certain conditions concerning the number of its unit holders, dispersal of ownership and public trading of its units.
With regard to your question concerning private corporations, in order for the shares of a private corporation to be a qualified investment for an RRSP or an RRIF, they must meet the requirements of a small business corporation or an eligible corporation.
From the information provided to us, the type of mutual fund you have described would not be eligible to be a qualified investment for an RRSP or an RRIF.
I am enclosing a copy of Interpretation Bulletin IT-320R3, Qualified Investments - Trusts Governed by Registered Retirement Savings Plans, Registered Education Savings Plans and Registered Retirement Income Funds, which provides further details concerning qualified investments for RRSPs and RRIFs, for your information.
If you should require additional information, I invite you to contact Mr. Gary Allen of the Income Tax Rulings Directorate, Policy and Legislation Branch, by calling 613-957-8953, or by writing to 16th Floor, Tower A, Place de Ville, 320 Queen Street, Ottawa ON K1A 0L5. Mr. Allen is aware of our correspondence and will be pleased to assist you.
I trust that my comments will be of assistance.
Yours sincerely,
Bill McCloskey
Assistant Commissioner
Policy and Legislation Branch
Attachment
Gary Allen
952-9853
February 13, 2003
2003-018446
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