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 we apply the Part XI tax to the aggregate property held by all of an annuitant's RRSPs?
Position: No.
Reasons: The law clearly provides that each trust is subject to the foreign property limits.
XXXXXXXXXX 991011
M. P. Sarazin
Attention: XXXXXXXXXX
August 6, 1999
Dear Sirs:
Re: Foreign Property held in Registered Retirement Savings Plans (RRSPs)
This is in reply to your letter dated April 6, 1999, wherein you requested relief from the application of Part XI of the Income Tax Act (the "Act") on the basis that, even though an annuitant may have one RRSP with excess foreign property, the aggregate foreign property held by all of the annuitant's RRSPs administered by your company is within the limit allowed under the Act.
Your company administers a small number of self-directed RRSPs through the XXXXXXXXXX Program and, as a result of system restraints, you are not able to service all investments a customer may have in a single RRSP. Where an individual has several RRSPs, your system monitors the foreign content held in all of the RRSPs when, in fact, the foreign content is often contained in one RRSP. Consequently, subsection 206(2) of the Act applies in respect of the excess foreign property held in the one RRSP. Since you are taking steps to correct the problem and, in your view, you have complied with the general spirit of the Act, you do not believe that Part XI should apply to the particular RRSPs that hold the excess foreign property.
Pursuant to paragraph 205(b) of the Act, Part XI tax on excess foreign property is levied against each trust governed by an RRSP. Subsection 206(2) of the Act 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 the above comments will be of assistance.
Yours truly,
Patricia Spice
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
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