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.
RULINGS DIRECTORATE CORRESPONDENCE SUMMARY
PRINCIPAL ISSUES:
Can income be determined on an rrsp deposit account by referance to a stock market index?
POSITION TAKEN:
Yes
REASONS FOR POSITION TAKEN:
Wording in 146(20) suports the position that income on a deposit can be interest or another form of income.
Also see E932263 and E932421
LEGAL:
FINANCE OPINION:
JURISPRUDENCE:
RCT PUBLICATIONS:
HAA NUMBER:
HAA7255-1
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear Sirs:
RE: Index Term Deposits
This is in reply to your letter of December 8, 1993, wherein you asked if certain term deposits would qualify for use under a Registered Retirement Savings Plan (an "RRSP").
XXXXXXXXXX
Clause 146(1)(j)(ii)(C) of the Income Tax Act provides, in part, that a retirement savings plan includes an arrangement under which payment is made by an individual or his spouse as a deposit with a credit union to be used to provide a retirement income for the individual. The Act however does not stipulate that such a deposit must accrue income as interest. In fact, subsection 146(20) of the Act provides that a depository RRSP may have amounts credited or added to it which are interest or income in respect of the deposit. Accordingly, it is our opinion that a term deposit would be acceptable for the purposes of subparagraph 146(1)(j)(ii) of the Act when all or a portion of an amount credited or added to the deposit is income of the deposit calculated in reference to the performance of a stock index.
In providing the above comments, we would also like to note that it would remain a question of fact whether any amount is a deposit in any particular situation. While it is unlikely, there could be instances where under the terms of an agreement these amounts could be payments in trust or an investment in an index contract. This could only be determined from a review of the terms of a particular contract.
The above comments are based on our understanding of the law as it applies in general and may or may not apply to the circumstances of a particular case. However, they do not form an advance income tax ruling and they are not binding on the Department.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1994
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1994