2 October 1989 Ministerial Correspondence 58524 F - Partial Assignment of a Debenture to Self-directed RRSP

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.

October 2, 1989

Dear Sirs:

Re:  Partial Assignment of a Debenture to Self-Directed Registered Retirement Savings Plan ("RRSP")

This is in reply to your letters of July 31 and August 11, 1989 with documents enclosed concerning the above-mentioned subject.

24(1)

You have asked whether the Debenture described above would constitute a qualified investment as described in section 4900 of the Income Tax Regulations (the "Regulations"), for a trust governed by an RRSP. A request of this nature should be the subject of an advance income tax ruling in the manner described in the Department's Information Circular No. 70-6R (copy enclosed) as it is not a matter of general interpretation of tax law. However, we are prepared to express general views on the matter of debentures in relation to RRSP investments.

Subparagraph 4900(1)(i)(i) of the Regulations prescribes as a qualified investment, for purposes of subparagraph 146(1)(g)(iv) of the Income Tax Act (the "Act"), an investment which is a bond, debenture, note or similar obligation of a Canadian corporation provided payment of the principal amount of the obligation and the interest thereon is guaranteed by a corporation or a mutual fund trust whose shares or units, as the case may be, are listed on a prescribed stock exchange in Canada.

Where a debenture is guaranteed by more than one corporation, it is our general view that such a debenture would qualify under subparagraph 4900(1)(i)(i) of the Regulations provided that the shares of at least one of the corporations were listed on a prescribed stock exchange and that particular corporation guaranteed the payment of all of the principal amount and interest of the obligation.

The above comments are of a general nature only and are not binding on the Department. We have not examined the debenture referred to above and make no comments as to whether or not it is a qualified investment for an RRSP.

Yours truly,

for DirectorFinancial Industries DivisionRulings Directorate