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:
Does Reg 4900(12) apply a one time test
Position TAKEN:
Yes
Reasons FOR POSITION:
Routine reading of the law. But we hedged on whether the terms of a share could be altered to such an extent that it formed something new. not enough background.
XXXXXXXXXX 5-952314
Attention: XXXXXXXXXX
September 22, 1995
Dear Sirs:
Re: Subsection 4900(12) of the Income Tax Regulations
This is in reply to your Facsimile of August 29, 1995, regarding the above noted provision.
Subject to the provisions of subsection 4900(13) of the Income Tax Regulations (the "Regulations") subsection 4900(12) of the Regulations provides that for the purposes of paragraph (d) of the definition "qualified investment" in subsection 146(1) of the Income Tax Act (the "Act") and paragraph (c) of the definition of "qualified investment in subsection 146.3(1) of the Act, a property is a qualified investment for a trust governed by an RRSP or an RRIF at any time if, at the time of its acquisition by the trust, it was a share of a corporation described in one of paragraphs (a) through (c) of the Regulation and immediately after the property was acquired, the annuitant under the RRSP or RRIF was not a "connected shareholder" of the corporation as that term is defined in Regulation 4901(2). Therefore, we concur with your opinion that such properties will continue to be a qualified investments of the particular trust as long as the property remains in the trust.
We also concur with your opinion that the status of the property will not generally change if the characteristics of the property changes subsequent to the date of its acquisition provided the changes are not sufficient to consider that a new property has been acquired in substitution for the existing one. However, in this latter respect, we are not yet familiar with any situations where this might occur.
We trust these comments will be of assistance.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
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