11 February 1994 Internal T.I. 9314227 - HAA 7234-1 SEG FUND IS A FROEIGN PROPERTY (TRUST)

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 Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

RULINGS DIRECTORATE
CORRESPONDENCE SUMMARY

DOCUMENT TYPE:

District Office Memo

Principal Issues:

Is a segregated fund insurance policy a foreign property

Position TAKEN:

yes

Reasons FOR POSITION TAKEN:

A seg fund is defined as a trust for part 1 of the Act including sec. 104 and 108. 248(1) defines a trust and an inter vivos trust as having the same meaning for the Act as a whole as found in 104 and 108. Accordingly, a seg fund is a trust and is a foreign property pursuant to 206(1)(b)

LEGAL:

FINANCE OPINION:

JURISPRUDENCE:

RCT PUBLICATIONS:

HAA NUMBER: HAA7234-1

			February 11, 1994

	Winnipeg District Office	Head Office
A. White	Rulings Directorate
	Assistant Director	(613) 957-8953
	Client Services	

	Attention:  Debbie O'Grady
			5-931422

Segregated Fund Foreign Property Limits

This is in reply to your referral to us dated May 14, 1993, of an enquiry from XXXXXXXXXX a copy of which is attached, concerning the application of Part XI of the Income Tax Act (the "Act") to segregated fund policies.

It is our view that paragraph 146(1)(g) and subsection 206(1) of the Act do not apply to a Registered Retirement Savings Plan (an "RRSP") that is a contract described in subparagraph 146(1)(j)(i) of the Act.

It is, however, our view that a segregated fund policy, within the meaning of section 138.1 of the Act, is a foreign property. Subsection 138.1(1) of the Act deems a segregated fund to be an inter vivos trust for the purposes of Part I of the Act including subsections 104(1) and 108(1) which apply to define a trust in general. Subsection 248(1) of the Act then provides that a trust and an inter vivos trust have the meaning assigned by 104(1) and 108(1) respectively for purposes of the Act. Accordingly, it is our opinion that a segregated fund is deemed to be a trust for all purposes of the Act.

Following that a segregated fund is a trust, it is our opinion that it is a foreign property in accordance with paragraph 206(1)(b) of the Act if it is not also a registered investment.

Please note that these comments are based on our understanding of the law as it applies in general. However, they may or may not apply to the circumstances of a particular case and they are not binding on the Department.

for Director
Financial Industries Division
Rulings Directorate