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 delisted shares are qualified investments
Position: In some cases, yes.
Reasons: The shares may still be shares of a public corporation.
XXXXXXXXXX 991750
M. P. Baldwin
Attention : XXXXXXXXXX
October 26, 1999
Dear Sirs:
Re: Qualified Investments in an RRSP
This is in reply to your letter of August 8, 1999 asking for clarification of our letter to you of March 16, 1999 (990674) and in particular clarification of the qualified investment rules for a registered retirement savings plan ("RRSP").
Generally an RRSP can invest in shares of a corporation if the shares are listed on a prescribed stock exchange in Canada or in a country other than Canada, or if the corporation is a "public corporation" (other than a mortgage investment corporation) as defined in the Income Tax Act (the "Act") - please refer to the current version of IT-391 for a discussion of public corporation status. (Copies of Interpretation Bulletins are available from your local tax services office or on the Internet at the following site - http://www.rc.gc.ca/menu/EmenuKZV.html).It should be noted that for purposes of the Act, life insurance corporations are considered to be public corporations.
As noted in our previous letter to you, a delisted share, or a share the trading of which has been suspended, generally continues to exist until the corporation is legally wound up. Consequently, until the corporation is wound up or the share is sold by the RRSP, the cost amount of any delisted, suspended or worthless share held by the RRSP will continued to be used in computing any Part XI (i.e., excess foreign property) taxes owing under the Act.
When assets are contributed to an RRSP they are contributed at fair market value. This contribution-in-kind may give rise to a capital gain or loss in the hands of the annuitant. If a capital loss arises on the contribution, this loss is denied pursuant to subparagraph 40(2)(g)(iv) of the Income Tax Act. The fair market value of a delisted share or suspended share contributed to the RRSP is a question of fact.
We trust that the above comments will be of assistance.
Yours truly,
P. Spice
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1999
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1999
Email this Content