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:
Foreign property rules and writing covered call options
Position TAKEN:
Foreign property rules do not apply as a covered call option is not a property or a right for the security's holder. Cash received where writing a covered call option is considered as a means of possibly increasing proceeds from the sale of a security.
Reasons FOR POSITION TAKEN:
Routine. See 942710, 931863, 931606.
5-950118
XXXXXXXXXX G. Martineau
Attention: XXXXXXXXXX
March 27, 1995
Dear Sir\Madam:
Re: RRSP and Covered Call Option
This is in reply to your facsimile of January 17, 1995 concerning the foreign property's limit rules where an Registered Retirement Savings Plan ("RRSP") writes covered call options on such property.
The writing of a covered call option is not subject to the rules governing foreign property as it does not involve the acquisition of a property or right by the RRSP. Instead, the cash received from that transaction is received as a means of possibly increasing the proceeds from the sale of the underlying security which it holds and not as a deduction of the cost of the said security.
The above comments reflect 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 Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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, 1995
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, 1995
Email this Content