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.
May 15, 1990
Vancouver District Office
Conference Questions May 1990
- a) Assume that the shares issued by a corporation to the public are eligible as qualifying investments for certain registered deferred income plans, i.e. RRSP's, RRIF's, DPSP's, etc. If these shares are contributed by an investor to his or her RRSP, RRIF OR DPSP etc., will the amount of the deduction be considered as a prescribed benefit for the purposes of regulation 231(6) of the Income Tax Regulations?
- b) If a limited partner of a limited partnership is entitled to exchange his partnership unit for partnership property that has a fair market value equal to the fair market value of the partnership unit at the time of disposition, will the fair market value of the partnership property so distributed be considered a prescribed benefit for the purposes of regulation 231(6) of the Income Tax Regulations?
Department's Position
- a) Where shares issued by a corporation that are eligible as qualifying investments in RRSP, RRIF and DPSP are contributed to and held in such registered deferred income plans by a taxpayer, those shares will be considered "prescribed property" for the purposes of subsection 231(7) of the Regulations and hence will be excluded from the definition of "tax shelter" in subsection 237.1(1) of the Act.
- b) The determination of whether a limited partner's ability to exchange his partnership unit for partnership property that has a fair market value equal to the fair market value of the partnership unit at the time of disposition would have the effect of reducing the impact of any loss he may sustain is a determination which can only be made based on the facts of a particular situation. However, where a limited partner may be entitled by way of an agreement or other arrangement under which the investor has a right, either absolutely or contingently, to receive property equal to the fair market value of his partnership unit at the time the exchange occurs, generally no "prescribed benefit" would exist for the purposes of subsection 231(6) of the Regulations.
C. Bowen Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch Revenue Canada, Taxation May 10, 1990
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