31 May 1999 External T.I. 9905135 - PUBLIC CO, HEAD OFFICE, QUALIFIED

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:

Public company shares still remain a qualified investment if it moves its head office?

Position:

Yes

Reasons:

The shares continue to trade on the stock exchange.

XXXXXXXXXX 990513
M. P. Sarazin
Attention: XXXXXXXXXX

May 31, 1999

Dear Sir/Madam:

Re: Qualified Investment for Registered Retirement Savings Plans (“RRSP")

This is in reply to your letter dated February 26, 1999, wherein you ask whether the shares of XXXXXXXXXX, would continue to be a qualified investment, within the meaning assigned by subsection 146(1) of the Income Tax Act (the "Act'), for RRSPs if the domicile of the company is moved to the United States.

Comments

It appears that the interpretation you seek relates to proposed transactions to be undertaken by a specific taxpayer and, therefore, we bring to your attention Information Circular 70-6R3 dated December 30, 1996. Confirmation of tax consequences with respect to proposed transactions involving specific taxpayers will only be provided in response to a request for an advance income tax ruling. If you wish to obtain an advance income tax ruling with respect to specific transactions which are contemplated, a written request for an advance income tax ruling can be submitted in accordance with the Information Circular. Nevertheless, we can provide you with the following general comments.

The Department's general views regarding qualified investments for a trust governed by an RRSP can be found in the enclosed Interpretation Bulletin IT 320R2, Registered retirement savings plans - Qualified investments. You will note that subparagraphs 3(c) and (d) of IT-320R2 state that shares and debt obligations of corporations listed on a prescribed stock exchange in Canada and shares listed on a prescribed stock exchange outside Canada are qualified investments. Prescribed stock exchanges in Canada are listed in section 3200 of the Income Tax Regulations (the “Regulations") and paragraph 3200 (b) includes the Montreal Stock Exchange. Prescribed stock exchanges outside Canada are listed in section 3201 of the Regulations and subparagraph 3201(o)(viii) includes the National Association of Securities Dealers Automated Quotation System (NASDAQ).

The domicile of a corporation is not relevant for determining whether the shares of the corporation are qualified investments for a trust governed by an RRSP. However, the foreign property rules applicable to certain deferred income plans may become an issue when a corporation emigrates from Canada. Under these foreign property rules, certain trusts governed by deferred income plans may be subject to tax under Part XI of the Act where more than 20% of the cost amount of their property consists of foreign property. The Department's general views on the application of Part XI of the Act can be found in the enclosed Interpretation Bulletin IT412R2, Foreign property of registered plans.

We trust these comments will be of assistance.

Yours tru1y,

Paul Lynch
for Director
Financial Industries Division
Income Tax RuIings and
Interpretations Directorate