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: Is the Part XI tax applied in respect of the foreign property held by each individual RRSP or to the aggregate property held by all of an individual’s RRSPs?
Position: Each individual RRSP is subjected to Part XI on its own property.
Reasons: The law clearly provides that each trust is subject to the foreign property limits.
XXXXXXXXXX 982785
M. P. Sarazin
Attention: XXXXXXXXXX
November 5, 1998
Dear Sirs:
Re: XXXXXXXXXX
This is in reply to your memorandum dated October 19, 1998 and sent by fax to Wendy van der Kraay, wherein you ask whether taxes imposed under Part XI of the Income Tax Act (the “Act”) in respect of excessive holdings of foreign properties should be based on the foreign property held in each or in all of XXXXXXXXXX registered retirement savings plans (“RRSP”).
Pursuant to paragraph 205(b) of the Act, the Part XI tax on excess foreign property is levied against each trust governed by an RRSP. Subsection 206(2) provides that where at the end of any month after 1993 the total of the cost amount of foreign property exceeds generally 20% of the cost amount of all property held at that time, the RRSP trust is subject to a tax of 1% of the lesser of the excess and the total of the cost amounts of all foreign property. Consequently, it is the property in each individual RRSP trust which is subject to the limits imposed by subsection 206(2) of the Act and not the aggregate property held in all of the RRSP trusts of the one annuitant.
We trust these comments will be of assistance.
Yours truly,
Paul Lynch
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
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