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: Whether particular interests in a trust or in a partnership are qualified investments for an RPP, RRSP and DPSP.
Position: No comment re RPP; certain interests in a partnership or trust are qualified investments for RRSP and DPSP.
Reasons: Rules respecting RPPs are set by the pension authorities of a province or Canada; the interests in trusts and partnerships described in Reg. 4900 are qualified. Cannot confirm whether particular interest is qualified unless advance ruling request.
XXXXXXXXXX 991415
G. Kauppinen
Attention: XXXXXXXXXX
November 16, 1999
Dear Sirs:
Re: Qualified Investments
This is in reply to your facsimile transmission dated May 20, 1999. You have asked our opinion as to whether investments in certain securities will be considered qualified investments for a trust governed by a registered retirement savings plan ("RRSP"), a deferred profit sharing plan (" DPSP") or a registered pension plan (" RPP"). As stated in the detailed descriptions of the investments sent to us by XXXXXXXXXX on May 17, 1999, the investments in question are interests in a particular trust and in a particular partnership. Since your question relates to actual investments we are only able to provide a response in the context of a request for a formal advance income tax ruling in respect of a proposed purchase of such investments by a registered plan trust. Alternatively, and in particular if the investment has already been made, the relevant documentation should be forwarded to your local tax services office for their determination.
Although we cannot comment on the particular investments we can provide you with the following general comments which are not binding on the Canada Customs and Revenue Agency.
The definitions of "qualified investment" for an RRSP and DPSP are stated in subsection 146(1) and section 204 of the Income Tax Act ("Act") respectively. These definitions are further extended in Parts XLIV and LI of the Income Tax Regulations ("Regulations").
Investments which are allowed and those which are specifically prohibited for an RPP are described in paragraph 8502(h) and subsections 8514(1) and (2) of the Regulations. Since the investments allowed for an RPP are governed by Pension Benefit Standards Act, 1985 or a similar law of a province questions concerning this matter should be directed to the appropriate pension authorities. We are therefore restricting our comments to the qualified investment rules respecting an RRSP or DPSP trust.
As a general rule, interests in trusts and partnerships are not qualified investments for an RRSP or DPSP except as specified below.
An interest in a trust will be a qualified investment for an RRSP or DPSP at a particular time if at that time the interest is:
(a) a unit in a trust that is a mutual fund trust (paragraph 4900(1)(d) of the Regulations) or, subject to certain limitations, a "small business investment trust" (paragraph 4900(6)(c) of the Regulations) as that term is defined in subsection 5103(1) of the Regulations, or
(b) an interest in a trust that is a "registered investment" (paragraph 4900(1)(a) of the Regulations), as that term is defined in subsection 204.4(1) of the Act, during the calendar year in which the particular time occurs, or the immediately preceding year.
An interest in a partnership will be a qualified investment for an RRSP or DPSP at a particular time if at that time the interest is:
(a) a limited partnership unit (paragraph 4900(1)(n) of the Regulations) listed on a prescribed stock exchange (section 3200 of the Regulations), or
(b) subject to certain limitations, an interest of a limited partner in a "small business investment limited partnership" (paragraph 4900(6)(b) of the Regulations) as that term is defined in subsection 5102(1) of the Regulations.
We trust the foregoing comments are of assistance.
Your truly,
Patricia Spice
for Director
Financial Industries Division
Income Tax Rulings
and Interpretations Directorate
Policy and Legislation Branch
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