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:Are TSE 35 index warrants rrsp eligible
Position TAKEN:Same as Nikkei warrants
Reasons FOR POSITION:Same issuer same prospectus, new index
XXXXXXXXXX 5-942019
Attention: XXXXXXXXXX
August 31, 1994
Dear Madam:
Re: Eligibility of Stock Index Put Warrants as Registered Retirement Savings Plan ("RRSP") Investments
This is in reply to your letter of August 2, 1994, concerning the above-noted topic.
As indicated in Information Circular 70-6R2, we do not express opinions on specific proposed transactions other than as a reply to an advance income tax ruling. As a consequence, we may only offer the following general comments.
While we have not examined the prospectus submitted with your letter in detail and can not comment on it in particular, it is our opinion that warrants of the nature described would not be qualified investments for an RRSP except in respect of a particular time, if any, when it can be clearly established that cash will be realized if the warrants are exercised at that time. In particular, if the warrants will not give rise to cash if they are exercised on the day they are acquired, subsection 146(10) of the Income Tax Act (the "Act") would apply to require an income inclusion in the hands of the plan annuitant. Furthermore, if it is established that an investment was a qualified investment at the time of its acquisition but subsequently became an ineligible investment and the plan continued to hold it at the end of any month thereafter, a tax under Part XI.1 of the Act would be payable by the plan.
We regret that our reply could not be favourable.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
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