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:
Whether the time an investment is acquired by a deferred plan refers to the day on which the plan acquires the investment?
Position:
No, however a number of investors can acquire investments at the same time.
Reasons:
146(10) & 146.3(7) refer to at any time the trust acquires the NQI.
972410
XXXXXXXXXX Fouad Daaboul
Attention: XXXXXXXXXX
November 26, 1997
Re: Qualified Investment for Registered Retirement Savings
Plan ("RRSP") or Registered Retirement Income Fund ("RRIF")
This is in reply to your letter of September 5, 1997, in which you ask us to confirm that the "time" an investment is acquired by a deferred plan, such as an RRSP or RRIF, refers to the day on which the deferred plan acquires the investment and not the particular hour in the day.
Where a trust governed by an RRSP or RRIF acquires a non-qualified investment ("NQI") at any time subsections 146(10) or 146.3(7) of the Income Tax Act (the "Act") requires the annuitant under the plan to include in income the fair market value of the NQI.
You are concerned that subsection 146(10) or 146.3(7) of the Act would be applicable to an RRSP or RRIF in that day even though at a later time on the same day the property becomes a qualified investment. This could be the case where a corporation elects to be a public corporation or a trust meets the dispersal requirements to be mutual fund trust.
Opinion
We are of the opinion that the property must be a qualified investment at the time an RRSP or RRIF acquires it, otherwise subsection 146(10) or 146.3(7) of the Act would be applicable. However, for these purposes we can consider that a number of investors acquired the property at the same time. For example, a unit of a mutual fund trust is a qualified investment and one of the criteria to be a mutual fund trust is to have 150 investors. A number of RRSP trusts can acquire units at the same time to increase the number of investors from less than to greater than 150, and the Department would not consider some of them to have acquired an NQI provided that all other requirements are met.
These opinions are our best interpretation of the law as it applies generally. They may, however, not always be appropriate in the circumstances of a particular case, and as stated in paragraph 22 of Information Circular 70-6R3, they are not binding on this Department.
We hope our comments are of assistance to you.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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