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:
RRSP holding interest in a mortgage.
Position TAKEN:
Same as given in E9429455
Reasons FOR POSITION:
Basis for holding mortgages has not changed
XXXXXXXXXX 970699
Attention: XXXXXXXXXX
April 9, 1997
Dear Sirs:
Re: Qualified Investments for Registered Retirement Savings Plans
This is in reply to your letter of March 6, 1997, with respect to the holding of mortgages as qualified Investment for a registered retirement savings plan ("RRSP").
A qualified investment for a trust governed by an RRSP must be owned by the trustee of the RRSP under the terms of the trust and, since ownership of securities is normally demonstrated by their registration, the Department is of the view that investments of an RRSP trust should generally be registered in the name of the trustee and not, for example, in the name of the RRSP annuitant. The general position is set out in paragraph 1 of Interpretation Bulletin IT-320R while an exception is discussed in paragraph 14 of Information Circular 72-22R9 (copies enclosed).
Caution must be exercised when a trust will act in an agency capacity. If the mortgage is owned by a trust and the trustee of the RRSP holds an interest in the trust rather then an interest in the mortgage, the investment will not normally be a qualified investment because an interest in a trust is not a qualified investment for a trust governed by an RRSP except in limited circumstances such as when it is a registered investment as provided in Part X.2 of the Act or it is a mutual fund. Mortgage bonds issued by the debtor and administered by a trust holding a mortgage deed can often be used in these situations.
The above comments are based on our understanding of the law as it applies in general and may or may not apply to the circumstances of a particular case. They do not form an advance income tax ruling and they are not binding on the Department. Should you require a ruling on of the tax implications inherent in respect of a particular transaction, one can be given by this Directorate where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in our enclosed Information Circular 70-6R3, dated December 30, 1996.
We trust our comments will be of assistance.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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