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 ITA prevents deposit insurance corporation from requiring a credit union to use the capital it raised by issuing shares to RRSPs to offset the credit union's operating losses..
Position: No.
Reasons: Nothing in the Act on point.
XXXXXXXXXX 2000-001271
March 13, 2000
Dear XXXXXXXXXX:
Re: Credit Union Shares in Registered Retirement Savings Plan ("RRSP")
This is in reply to your letter of December 6, 1999, which was forwarded to us by the Windsor Tax Services Office and Winnipeg Tax Centre. You ask if the Deposit Insurance Corporation of Ontario ("DICO") is permitted to "cash-in" all or a portion of a credit union's shares held in your RRSP. You explain that the credit union is being required by the DICO to use the capital the credit union raised from the issuance of its shares to offset the credit union's operating losses.
There is nothing in the Income Tax Act (the "Act") which prohibits an insurer from exercising its rights in these circumstances even where such an exercise results in the RRSP or its investment becoming less valuable or even worthless. An insurer is subject to the provincial or federal laws regulating its activities as an insurer and your questions in this respect should be directed to the particular provincial agency which administers those laws or to the DICO itself. Questions concerning your rights as a shareholder should be directed to the credit union.
Yours truly,
P. Spice
for Director
Financial Industries Division
Income Tax Rulings Directorate
c.c.: M. Middleton
Client Services, Winnipeg T.C.
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