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
Dear XXXXXXXXXX
This is in reply to your enquiry of June 30, 1993, concerning the foreign property rules applicable to a self-directed registered retirement income fund ("RRIF").
The 18% (for 1993) maximum foreign property rule applies to each RRIF. Thus, where an individual has more than one RRIF, the 1% monthly penalty would apply where the cost amount of the foreign property held by a particular RRIF at the end of a month exceeds 18% of the cost amount of all the property held by the RRIF at the end of the month.
The minimum amount that must be withdrawn annually from a RRIF does not have to be withdrawn in a manner reflecting the percentage that foreign property held by the RRIF is of the total property held by the RRIF. For example, if the minimum annual amount that must be withdrawn from a RRIF is $10,000 and the RRIF held foreign property having a fair market value in excess of $10,000, foreign property having a fair market value of $10,000 could be withdrawn from the RRIF. Alternatively, other property having a fair market value of $10,000 could be withdrawn or a mix of foreign property and other property having a combined fair market value of $10,000 could be withdrawn.
Where property held by a RRIF is transferred to another RRIF, the transferee RRIF acquires the property at its fair market value. This fair market value would thus be the cost to the transferee RRIF of the transferred property for the purposes of determining the percentage that the cost amount of its foreign property is of the cost amount of its total property. The cost amount of each remaining property held by the transferor RRIF would not change as a result of the transfer in and of itself.
Our comments are an expression of opinion only and are not binding on the Department as explained in paragraph 21 of Information Circular 70-6R2. We trust, however, that they are of assistance.
Yours truly,
for DirectorFinancial Industries DivisionRulings DirectorateHAA 7251-1
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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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