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: Can a mortgage bond issued by a school be a qualified investment for a RRSP?
Position: Question of fact.
Reasons: Mortgage bond must qualify under 4900(4) or 4900(1)(j) of the Regulations.
XXXXXXXXXX 5-982926
Fouad Daaboul
Attention: XXXXXXXXXX
February 5, 1999
Dear Sirs:
Re: Qualified Investments for a RRSP
This is in reply to your facsimile submission of November 10, 1998, wherein you requested an advance income tax ruling that bonds issued by XXXXXXXXXX would be a qualified investment for a registered retirement savings plan ("RRSP").
In an earlier telephone conversation (XXXXXXXXXX /Lynch), we confirmed that we are not able to provide a favourable ruling. However, we offer the following general comments which are not binding on the Department.
The enclosed Interpretation Bulletin IT-320R2 provides the Department’s general views regarding qualified and non-qualified investments for trusts governed by an RRSP. In summary, the kinds of investments that may be held by an RRSP are described in the definition of “qualified investment” in subsection 146(1) of the Income Tax Act and in section 4900 of the Income Tax Regulations (the “Regulations”).
Under section 4900 of the Regulations, bonds issued by certain trusts, credit unions, cooperative corporations, Canadian corporations, public corporations, governments and international organizations may, where the specific conditions relating to the particular entity are satisfied, qualify as qualified investments for a RRSP. However, bonds issued by a high school would not appear to meet any of the provisions of section 4900 of the Regulations.
A mortgage bond, secured by real property situated in Canada, may be a qualified investment for an RRSP where the bond would constitute an interest in a mortgage. In determining whether a mortgage (or mortgage bond) is a qualified investment for an RRSP, we would refer you to paragraph 9 of the enclosed IT-320R2 which details the particular conditions that have to be satisfied.
We trust our comments will be of assistance to you.
Yours truly,
Paul Lynch
for Director
Financial Industries Division
Income Tax Rulings
and Interpretations Directorate
Policy and Legislation Branch
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