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.
Principal Issues: Is a mortgage a qualified investment for an RRSP?
Position: Question of fact.
Reasons: Based on the question posed by the taxpayer, provided the conditions of paragraph 4900(1)(j.1) of the Income Tax Regulations are satisfied, a debt obligation secured by a mortgage in respect of real property situated in Canada is a qualified investment for an RRSP.
Signed on October 24, 2006
XXXXXXXXXX
Dear XXXXXXXXXX:
I am writing in reply to your letter received on August 11, 2006, concerning whether it is acceptable to buy or build a home and have your self-directed registered retirement savings plan (RRSP) hold the mortgage. I apologize for the delay in responding.
The income tax legislation lists some of the types of qualified investments that may be held by an RRSP. A debt obligation that is secured by a mortgage may be a qualified investment for an RRSP, provided certain conditions are satisfied.
When an RRSP annuitant is either the debtor or a person not dealing at arm's length with the debtor, a debt obligation that is secured by a mortgage, on real property situated in Canada, is a qualified investment for an RRSP when
1) the debt obligation is administered by an approved lender under the National Housing Act, and
2) the debt obligation is insured either under the National Housing Act or by an approved private insurer.
While the income tax legislation lists the types of investments that are qualified investments for an RRSP, financial institutions that issue RRSPs may have internal policies that limit the type of qualified investments that may be held by RRSPs that they issue. The legislation does not prohibit them from having such policies.
I trust that this explanation is helpful.
Sincerely,
Brian McCauley
Assistant Commissioner
Legislative Policy and
Regulatory Affairs Branch
Gary Allen
952-9853
August 22, 2006
2006-020103
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