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:
Is a pooled fund trust a qualified investment for an RRSP?
Position TAKEN:
Only if it is a registered investment as defined in 204.4(1).
Reasons FOR POSITION TAKEN:
Paragraph 4900(1)(a) of the Regulations.
XXXXXXXXXX 941486
Attention: XXXXXXXXXX
July 7, 1994
Dear Sirs:
Re: Qualified Investment for RRSP
This is in reply to your letter of May 21, 1994, covering a copy of your letter dated December 2, 1993. We apologize for the delay in responding to the latter letter; unfortunately, its original was not received in our Directorate.
As noted in Information Circular 70-6R2, we do not express opinions on specific proposed transactions other than as a reply to an advance income tax ruling request. While we are unable to address your particular situation, we can offer you the following general comments.
You have asked whether an undivided interest in a pool of short term notes issued by a bank would be a qualified investment for a trust governed by a registered retirement savings plan ("RRSP"). The eligibility of such an interest as a qualified investment for an RRSP is a question of fact. However, it appears that in the scenario you describe the RRSPs would be attempting to buy an interest in a trust. Pursuant to paragraph 4900(1)(a) of the Income Tax Regulations, an interest in a pooled fund trust would only be a qualified investment where it is a "registered investment", as defined in subsection 204.4(1) of the Income Tax Act (the "Act"). Generally, a pooled fund trust would be a registered investment if it meets the requirements of one of the paragraphs of subsection 204.4(2) of the Act, application has been made to the Minister in prescribed form, and it has been accepted by the Minister as a registered investment.
You have also asked if such an investment would be similar to a U.S. dollar denominated provincial bond. Bonds, debentures, notes, mortgages, hypothecs or similar obligations of the government of a province or an agent thereof are qualified investments pursuant to subparagraphs 146(1)(g)(i) and 204(e)(ii) of the Act. The fact that such an obligation or any obligation is denominated in a foreign currency would not, in and of itself, exclude that property from being a qualified investment. However, foreign currency is excluded from being a qualified investment by virtue of subparagraph 146(1)(g)(i) and 204(e)(ii) of the Act.
The foregoing comments are an expression of opinion only and are not binding on the Department. We trust, however, that they are of assistance.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
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