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.
Principal Issues:
General question on small corporation as qualified investment for RRSP.
Position TAKEN:
Routine referral to provisions of Act due to generality of question.
Reasons FOR POSITION TAKEN:
Routine.
XXXXXXXXXX 941343
June 28, 1994
Dear XXXXXXXXXX:
This is in reply to your letter of April 15, 1994 in which you requested an advance income tax ruling in respect of investments for Registered Retirement Savings Plans (RRSPs). Advance income tax rulings are only given where a specific proposed transaction is identified, and where the request is made in the manner set out in the enclosed Information Circular 70-6R2. We would also note that our Directorate is not permitted to give tax planning advice.
Due to the technical complexity of the provisions of the Income Tax Act (the "Act") and the generality of your first question, the following references are meant to provide only an overview of certain of the relevant provisions and under no circumstances are they to be considered to be either comprehensive or all inclusive. If you have more specific queries regarding the relevant provisions of the Act, we would be pleased to address them.
A "qualified investment" for an RRSP is defined in paragraph 146(1)(g) of the Act, and in sections 4900 and 5100 of the Income Tax Act Regulations (the "Regulations"). We enclose a copy of Interpretation Bulletin IT-320R2 "Registered Savings Plans - Qualified Investments" which discusses many of the types of property that constitute qualified investments for an RRSP. In addition, since the date of that bulletin, the Department of Finance released "Draft Legislation and Regulations on Investment in Small and Medium-Sized Business" (December 2, 1992). Under both current and proposed legislation, it is possible for shares of certain small Canadian corporations to be qualified investments and for units of "Small Business Investment Limited Partnerships" to be qualified investments, subject to many restrictions and conditions. A unit of a mutual fund trust, as defined in subsection 132(6) of the Act would be a qualifying investment for an RRSP provided it meets the conditions in that subsection and section 4801 of the Regulations.
Your second question appears to be in respect of marketing, not tax.
We would also note that the speculative transactions you are contemplating may result in any RRSP which can be considered to be carrying on such transactions being taxable.
The foregoing comments are an expression of opinion only and are not binding on the Department.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
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