29 October 2001 External T.I. 2001-0099135 - RRSP FOREIGN PROPERTY TAX

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 CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: For purposes of calculating tax on excess foreign content pursuant to 206(2), when is a share that is foreign property considered to have been acquired, on the record date or the date the shares are delivered?

Position: Shares are considered to be acquired on the date the shares are delivered.

Reasons: All attributes of ownership are not acquired until the date the shares are delivered.

XXXXXXXXXX 			2001-009913
G. Kauppinen
October 29, 2001

Dear XXXXXXXXXX:

Re: Registered Retirement Savings Plans ("RRSP") - Tax on Excess Foreign Property

This is in reply to your facsimile transmission dated August 21, 2001 regarding the calculation of the tax on excess foreign property under subsection 206(2) of the Income Tax Act ("Act"). Specifically, you ask which is the proper date to use as the time that an RRSP acquires a share that is foreign property, the date of record or the date that the shares are delivered to the purchaser.

Opinions concerning proposed transactions involving specific taxpayers will only be provided in response to a request for an advance income tax ruling. For more information concerning advance tax rulings, please refer to Information Circular 70-6R4 dated January 29, 2001, issued by the Canada Customs and Revenue Agency. Copies of information circulars and interpretation bulletins are available from your local tax services office or on the Internet at the following site - http://www.ccra-adrc.gc.ca/formspubs/menu-e.html.

The situation described in your request appears to be an actual situation with few facts provided. Requests for opinions regarding completed transactions, as in your case, should be directed to your local Tax Services Office as they are responsible for resolving questions of fact. However, we can provide you with the following general comments.

Our Comments

We refer you to Interpretation Bulletin IT-133 dated, November 30, 1973, entitled Stock Exchange Transactions - Date of Disposition of Share ("IT-133"). To summarize the comments therein, which still reflect the position of the Canada Customs and Revenue Agency, for transactions after 1974, a share traded on a stock exchange will usually be considered to have been disposed of or acquired for income tax purposes on the "settlement date", the date on or before which the vendor is required to deliver the share certificates and the purchaser is required to make payment therefore. If a broker pays the vendor before the settlement date, this will be considered an advance only and the transaction will not be considered to be completed until the shares are delivered to the purchaser. However, please note paragraph 6 of IT-133 which states:

In those cases where arrangements are made between vendor, purchaser and their brokers for a further delay prior to delivery and payment, the disposition and acquisition will be at a date subsequent to "settlement date", namely the date on which delivery and payment are effected.

Accordingly, the date that the shares are delivered to the purchaser will generally be the date that the transaction is recognized for purposes of the Act.

We trust our comments will be of assistance to you.

Yours truly,

Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch