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.
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear Madam/Sir,
RE: Foreign currency held by a trust governed by a registered retirement savings plan ("RRSP") or registered retirement income fund ("RRIF")
This is in reply to your letter of March 3, 1993 concerning the above- mentioned subject and your reference to said subject in The Tax Windows.
Pursuant to subparagraph 204(e)(i) of the Income Tax Act, foreign currency is not a qualified investment for RRSPs and RRIFs. As for the foreign property rules, only foreign currency held outside Canada would be foreign property.
The Department does have a position which evolved as a result of a submission received indicating that an RRSP trust trading in qualified investments denominated in a foreign currency would invariably hold foreign currency on a temporary basis. This could occur where interest or a dividend on a particular security held by the trust is received in foreign currency or where the trust receives foreign currency on the disposition of a security denominated in the foreign currency. It could also occur where the trust converts Canadian dollars into a particular foreign currency to allow it to acquire a qualified investment denominated in that currency. Technically, subsection 146(10) of the Act would apply each time the RRSP trust acquires the foreign currency and subsection 146(6) of the Act would apply each time it is disposed of. This was considered to be an unintentional result and the Department agreed not to apply those provisions where the foreign currency was converted to Canadian currency or used to acquire a qualified investment within a reasonable period of time (usually one month).
The opinions expressed in this letter are the same as those found in the letter of May 5, 1992 which was summarized in The Tax Window you referred to. Unfortunately, the summary of the letter of May 5, 1992 does not really reflect its content.
We trust our comments will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate
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© Her Majesty the Queen in Right of Canada, 1993
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© Sa Majesté la Reine du Chef du Canada, 1993
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