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 foreign stock exchange index units are qualified investments for deferred income plans
Position: Currently WEBS are qualified investments. Proposed regulations will consider WEBS, SPDRs & DIAMONDs to be qualified investments after 1993.
Reasons: WEBS are shares listed on a prescribed foreign stock exchange. If regulations are amended as proposed, SPDRs & DIAMONDs will be qualified investments.
S. E. Thomson
November 4, 1999
Re: Foreign Stock Exchange Index Units
This is in reply to your letter of August 27, 1999 in which you ask if "index-linked deposit products" are considered to be qualified investments for trusts governed by registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs).
In our opinion, World Equity Benchmark Shares (WEBS) are shares listed on a prescribed foreign stock exchange, and therefore are qualified investments under paragraph (h) of the definition of "qualified investment" in section 204 of the Income Tax Act where the RRSP or RRIF trust is the beneficial owner of the WEBS. However, Standard & Poor 500 Depositary Receipts (SPDRs) do not qualify. Other index units may qualify depending on the characteristics of the units.
On December 18, 1998, the Department of Finance issued a press release (98-129, copy enclosed) to announce an amendment to the Income Tax Regulations to include the following foreign stock exchange index units as qualified investments for trusts governed by RRSPs, RRIFs and deferred profit sharing plans:
- Standard & Poor 500 Depositary Receipts (SPDRs)
- units valued on the basis of the Dow Jones Industrial Average (DIAMONDs)
- units for a particular country valued on the basis of the Morgan Stanley Capital Investment Index (WEBs)
The amendments are proposed to apply to property acquired after 1993. Draft regulations have not been issued to date.
We trust that the above will provide some assistance.
Financial Industries Division
Income Tax Rulings and
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