29 August 1995 External T.I. 9506325 - SIMILAR OBLIGATIONS AND 212(1)(B)(II)(C)(II)

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:

Do obligations offered by XXXXXXXXXX qualify under
1) 212(1)(b)(vii)
2) 212(1)(b)(iii)(C)
3) 212(1)(b)(ii)(C)(II)

Position TAKEN:

1) No
2) No, XXXXXXXXXX
3) Yes

Reasons FOR POSITION TAKEN:

		XXXXXXXXXX
3) GIC's and term deposits are "similar obligation".

									950632
XXXXXXXXXX							C. Tremblay

Attention: XXXXXXXXXX

August 29, 1995

Dear Sirs:

Re: XXXXXXXXXX

This is in reply to your letter of March 3, 1995 requesting an income tax ruling

XXXXXXXXXX

In our opinion, the expression "similar obligation" should be interpreted in the light of the words "bonds, debentures, notes, mortgages" which precede it in the relevant provision. The obligations listed represent similar written obligations, which contain an explicit promise by the issuer to reimburse an amount on a given day. To be a similar obligation, an obligation must also be of the same nature as the obligations listed. It appears that a guaranteed investment certificate issued for a specific term may be of the same nature as a debenture or a note acknowledging indebtness; accordingly, we have reconsidered our position. Thus, in our view, term deposits and guaranteed investment certificates issued by XXXXXXXXXX to non-residents would constitute similar obligations for the purposes of subclause 212(1)(b)(ii)(C)(II) of the Act.

Since the XXXXXXXXXX District Taxation Office has the responsibility of determining the tax consequences of completed transactions and their implications to a particular taxpayer, you may wish to contact XXXXXXXXXX Chief of Audit who is aware of our conclusions in this matter.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch