CRA addresses the status of mutual funds with limited windows for unit redemption

Since 1991, CRA has had a policy of considering units of a trust to be redeemable on demand for purposes of the unit trust test in s. 108(2)(a) where a provincial securities commission policy treats the units as redeemable on demand for securities’ laws purposes – even where the securities legislation accepts a right to redeem only twice a year as satisfying this condition. It is not clear how useful this position is given that most or all REITs and income funds do qualify as mutual funds for securities law purposes and, therefore, are not able to qualify as mutual funds whose units are redeemable on demand for such purposes.

Neal Armstrong. Summary of 16 November 2015 T.I. 2015-0595041E5 under s. 108(2)(a).