30 November 1997 Ministerial Letter 980608A - FOREIGN INVESTMENT OF MUTUAL FUND TRUST

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.

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Attention: XXXXXXXXXX

XXXXXXXXXX, 1998

Dear Sirs:

Re: Supplementary to Advance Income Tax Ruling 972615
XXXXXXXXXX
XXXXXXXXXX

This is in reply to your letters of XXXXXXXXXX wherein you requested amendments and a time extension to advance income tax ruling number 972615 (the “Ruling”) on behalf of XXXXXXXXXX. We have made the following changes as requested:

i) “Trust” will now refer to “XXXXXXXXXX” replacing XXXXXXXXXX as the name of the Trust.

ii) Paragraphs 3 and 4 of the Ruling are deleted and replaced as follows:

The capital of the Trust will be represented by transferable units (the “Units”) of beneficial interest in the Trust, the terms and conditions of each of which are identical. Each Unit will represent an undivided interest in the net assets of the Trust. Units will be distributed by way of prospectus exemption.

iii) Item (iv) of paragraph 6 is deleted, with the result that paragraph 6 is restated as follows:

The investment objectives of the Trust are: (i) to generate a relatively stable increase in the net asset value of the Trust; (ii) to ensure that the performance of the Trust is substantially independent of the major fixed income and equity markets; and (iii) to achieve a low volatility. The Trust seeks to achieve these objectives, while at the same time ensuring its Units are not "foreign property", as defined in the Act, to taxpayers listed in paragraphs 205(a) to (f) of the Act.

iv) Paragraph 7 of the Ruling is deleted and replaced as follows:

The Trust intends to qualify as a “pooled fund trust”, as defined in subsection 5000(7) of the Income Tax Regulations. To that end, the Trust will invest at least 90% of the cost amount of its property in property of Canadian resident issuers or debtors of property described in subsection 5000(7) of the Income Tax Regulations and not more than 10% of the cost amount of such property will consist of shares, bonds, mortgages and other securities of any one corporation or debtor, other than Her Majesty in Right of Canada or a province or a Canadian municipality. Such property will generally consist of Canadian money market investments. Also, at least 95% of the income of the Trust will be derived from, or from the dispositions of, investments described in the definition of “pooled fund trust” in paragraph 5000(7) (a) of the Income Tax Regulations.

v) Paragraph 14 of the Ruling is deleted and replaced as follows:

In determining whether the conditions in the definition of “pooled fund trust” found in paragraphs 5000(7)(a) and (b) of the Income Tax Regulations are met, the Trust will measure its properties at the “cost amount” of each property as defined in subsection 248(1) of the Act.

vi) Ruling C is deleted and replaced as follows:

Provided the Trust qualifies as a “pooled fund trust”, as defined in subsection 5000(7) of the Income Tax Regulations and provided the cost amount of foreign property held by the Trust in any particular month, including its investment in Subco, does not exceed 20% of the cost amount of all property held by it, subsection 5000(1) of the Income Tax Regulations will apply to prescribe Units of the Trust not to be foreign property.

vii) The reference to XXXXXXXXXX in the final paragraph of the Ruling is deleted and replaced with a reference to XXXXXXXXXX.

All paragraphs in the Ruling will be renumbered as required. Lastly, we confirm that the above changes will not otherwise affect the rulings given in the Ruling and they will continue to be binding on the Department as and to the extent indicated therein.

Yours truly,

for Director
Resources, Partnerships,
and Trusts Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch