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 ISSUE:
Whether a Canadian Government Bond denominated in a foreign currency is considered "foreign property".
Whether the foreign currency held from the maturity of a Canadian Government Bond in a foreign currency is considered a non-qualified investment and/or a foreign property, if promptly reinvested into another Canadian Government Bond in a foreign currency.
Position TAKEN:
A Bond in foreign currency issued by the Canadian government is not a foreign property.
Provided that the foreign currency is converted to an other Canadian Government Bond within a reasonable time ( for example, one month), the Department would not consider the trust to have acquired a non-qualified investment. Also, the foreign currency would not be a foreign property if it is situated in Canada.
Reasons FOR POSITION TAKEN:
Definition of "qualified investment" in paragraph 146(1) of the Act.
5-950083
XXXXXXXXXX L. Roy
March 10, 1995
Dear Sirs:
Re: Qualified Investments and Foreign Property
This is in reply to your facsimile of January 12, 1995 in which you asked whether Canadian Government Bonds denominated in a foreign currency are qualified investments and foreign property for a trust governed by a Registered Retirement Savings Plan ("RRSP").
We hereby confirm that such bonds are qualified investments and are not foreign property.
Foreign currency itself is not a qualified investment for a RRSP trust but it would not be a foreign property if it is situated in Canada. Where a trust holds foreign currency after the disposition of an asset denominated in foreign currency, it is the Department's view that provided the foreign currency is converted to an otherwise qualified investment within a reasonable time (for example, one month), the trust would not be considered to have acquired a non-qualified investment.
The foregoing opinions are not rulings and, in accordance with the guidelines set out in Information Circular 70-6R2 dated September 28, 1990, are not binding on the Department.
We trust the above comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
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