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.
5-903630
Dear Sirs:
This is in reply to your letter of December 13, 1990 concerning qualified investments for a trust governed by a registered retirement savings plan (an "RRSP trust").
In particular, your concern involves a 24(1)
With respect thereto, you ask for our advice on whether or not such debentures or other mortgage security would represent a qualified investment for an RRSP trust. You further ask whether or not you might incorporate a mortgage investment corporation pursuant to paragraph 4900(1)(c) of the Income Tax Regulations (the "Regulations") or a co-operative corporation pursuant to paragraph 4900(1)(h) of the Regulations.
We note that your enquiry relates to a specific proposed transaction. As indicated in Information Circular 70-6R2, we do not provide written opinions on such transactions other than in reply to an advance ruling request submitted in the manner set out in that bulletin. The following comments are therefore of a general nature only.
Whether or not a particular investment is a qualified investment for an RRSP trust can be determined only at the time the investment is acquired by the trust. Qualified investment for an RRSP trust include a bond, debenture, note or similar obligation
(a) of the government of a province or an agent thereof,
(b) of a municipality in Canada, or a municipal or public body performing a function of government in Canada,
(c) of a corporation, commission or association not less than 90% of the shares or capital of which is owned by Her Majesty in right of a province or by a Canadian municipality,
(d) of a subsidiary wholly owned corporation that is a subsidiary to a corporation, commission or association described in (c) above,
(e) of a corporation the shares of which are listed on a prescribed stock exchange in Canada,
(f) issued by, or on deposit with, a credit union that meets the requirements set out in paragraph 4900(1)(g) of the Regulations,
(g) issued by a cooperative corporation that meets the requirements set out in paragraph 4900(1)(h) of the regulations, or
(h) of a Canadian corporation where one or more of the requirements set out in paragraph 4900(1)(i) of the Regulations is met.
With respect to your question on whether or not a mortgage investment corporation or a co-operative corporation might be incorporated, we are not in a position to respond as our role is interpretive rather than advisory in nature. We note, however, that a "debenture or other mortgage security" issued by a mortgage investment corporation does not represent a qualified investment for an RRSP trust. Rather, it is a share of the capital stock of such a corporation that will represent a qualified investment for an RRSP trust where the requirement set out in paragraph 4900(1)(c) of the Regulations is met.
A debenture or other security that represents an interest in a mortgage secured by real property situated in Canada is a qualified investment for an RRSP trust pursuant to subsection 4900(4) of the Regulations. It is a question of fact whether or not a particular security represents such an interest
We trust that our comments are of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate
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