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: The phrase "listed for trading on a prescribed stock exchange" is used many times in the Act and Regulations. For instance, an RRSP which wishes to purchase shares must ensure that they are "listed" so they are eligible investments. However, if an RRSP buys shares in an IPO, how will the taxpayer determine if the shares are listed?
Position: We have had a longstanding position that shares will be regarded as being listed on a stock exchange so long as a full listing (i.e., an unqualified listing prior to the date set for the shares to be called for trading) of the shares exists. Shares that are conditionally listed will not be listed until the time at which all of the conditions for their listing have been satisfied. We are considering this position in conjunction with an advance income tax ruling request in progress for an income trust - see addendum to response.
Reasons: Question of fact.
2007 STEP Round Table
Q. 14 LISTED FOR TRADING
The phrase "listed for trading on a prescribed stock exchange" is used many times in the Act and Regulations. For instance, an RRSP which wishes to purchases shares must ensure that they are "listed" so they are eligible investments. However, if an RRSP buys shares in an IPO, how will the taxpayer determine if the shares are listed? Please note that the Regulations include a definition of "publicly traded."
Response
While it is a question of fact as to when shares are listed on a stock exchange, we have had a longstanding position (see CRA document 9627665) that shares will be regarded as being listed on a stock exchange so long as a full listing (i.e., an unqualified listing prior to the date set for the shares to be called for trading of the shares) exists. Shares that are conditionally listed will not be listed until the time at which all of the conditions for their listing have been satisfied. We are considering this position in conjunction with an advance income tax ruling request in progress for an income trust.
June 8, 2007
Addendum
In the situation submitted for an advance income tax ruling, all requirements to be listed on the exchange were met on a particular day ("day 30") and the securities were to commence trading at the opening of business on a subsequent day ("day 35"). Before the opening of business on day 35, however, a delay was announced by the intended issuer. Subsequently, the exchange was not prepared to confirm that the securities were listed on day 30 and consequently, we did not accept that the securities were listed on day 30.
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