Section 262

Administrative Policy

S3-F10-C1 - Qualified Investments – RRSPs, RESPs, RRIFs, RDSPs and TFSAs

OTC systems not included

1.18 Over-the-counter (OTC) quotation systems, such as the OTC Bulletin Board and OTC Link ATS

AIM, Alternext excluded

1.19 Many stock exchanges in the European Union (EU) operate two market segments, an official EU-regulated market and an unofficial market that is regulated by the exchange itself. The latter markets include the Alternative Investment Market (AIM) of the London Stock Exchange, Alternext operated by the various stock exchanges that comprise Euronext and the Open Market of the Frankfurt Stock Exchange. ... The unofficial, exchange-regulated markets do not qualify as they are not recognized as an official market under European Union law, nor are they subject to stringent transparency requirements and investor protection regulations. ...

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 204 - qualified investment - (a) 208
Tax Topics - Income Tax Act - Section 204 - qualified investment - (d) 320
Tax Topics - Income Tax Regulations - Regulation 4900 - Subsection 4900(1) - Paragraph 4900(1)(b) 256
Tax Topics - Income Tax Act - Section 204.4 - Subsection 204.4(1) 107
Tax Topics - Income Tax Regulations - Regulation 4900 - Subsection 4900(2) 52
Tax Topics - Income Tax Regulations - Regulation 4900 - Subsection 4900(1) - Paragraph 4900(1)(j) 149
Tax Topics - Income Tax Regulations - Regulation 4900 - Subsection 4900(1) - Paragraph 4900(1)(j.1) 53
Tax Topics - Income Tax Act - Section 204 - qualified investment - (b) 55
Tax Topics - Income Tax Regulations - Regulation 4900 - Subsection 4900(1) - Paragraph 4900(1)(e) 173
Tax Topics - Income Tax Act - Section 207.01 - Subsection 207.01(1) - Advantage - Paragraph (b) 69
Tax Topics - Income Tax Regulations - Regulation 4900 - Subsection 4900(1) - Paragraph 4900(1)(u) 80
Tax Topics - Income Tax Regulations - Regulation 4900 - Subsection 4900(1) - Paragraph 4900(1)(v) 50
Tax Topics - Income Tax Regulations - Regulation 4901 - Subsection (1) - Specified small business corporation 38
Tax Topics - Income Tax Regulations - Regulation 5100 - Eligible Corporation 44
Tax Topics - Income Tax Act - Section 207.04 - Subsection 207.04(4) 82
Tax Topics - Income Tax Act - Section 146 - Subsection 146(10.1) 90
Tax Topics - Income Tax Act - Section 207.01 - Subsection 207.01(6) 110
Tax Topics - Income Tax Act - Section 146 - Subsection 146(4) - Paragraph 146(4)(a) 118
Tax Topics - Income Tax Act - Section 146 - Subsection 146(4) - Paragraph 146(4)(b) 94
Tax Topics - Income Tax Act - Section 146.2 - Subsection 146.2(6) 156

4 April 2014 Ministerial Correspondence 2014-0519461M4 - ETF a qualified investment if traded on BATS?

policy behind stock market designation/BATS

Is an exchange traded fund (ETF) listed on the Better Alternative Trading System (BATS) a qualified investment for an RRSP or a TFSA? CRA responded "The BATS is not included on the list of designated stock exchanges" and referred to the 2008 archived Finance newsletter below respecting the purpose of designating stock exchanges.

24 August 2012 External T.I. 2012-0436031E5 - Designated Stock Exchange

The taxpayer asked whether the NYSE MKT (formerly NYSE AMEX, LLC) is a designated stock exchange. CRA noted that it was not on the Department of Finance list of designated stock exchanges, but stated that it would consult the Department of Finance as to whether Finance will add it to the list.

24 September 2012 External T.I. 2012-0455741E5 - AIM of the London Stock Exchange

AIM not designated

The Alternative Investment Market ("AIM") of the London Stock Exchange ("LSE") is not a designated stock exchange, - but is considered a "recognized stock exchange" given that it is located in the UK (a member of the OECD which has a tax treaty with Canada), and it is a "stock exchange" in the general legal and commercial meaning of that term, i.e., "AIM is a market which allows for the organized purchase and sale of securities and it is considered to be a multilateral trading facility under UK law."

13 July 2010 External T.I. 2010-0359251E5 - Frankfurt Stock Exchange

"The Open Market of the Frankfurt Stock Exchange, as well as other unofficial exchange-regulated markets in the European Union, would not qualify as a designated stock exchange for Canadian income tax purposes on the basis that such markets are not recognized as official markets under European law and are not subject to stringent transparency requirements and investor protection regulations."

Finance

Designated Stock Exchanges

Department of Finance Backgrounder "Process for Designating Stock Exchanges" 2008

…The Minister of Finance's role is to ensure that investments, given their tax-deferred status for policy purposes, trade on well-governed, regulated and transparent markets. Designated Stock Exchanges must therefore be explicitly designated, by public notice, by the Minister of Finance. Designated Stock Exchanges are also considered to be Recognized Stock Exchanges and Stock Exchanges for the purposes of the Income Tax Act. Recognized Stock Exchanges are determined by definition under that Act. "Stock Exchange" is not defined in the tax law; it is intended that the general legal and commercial meaning of the term will apply. …

...The Minister will consider all relevant information without limitation when evaluating an exchange's application for designation status. This will include the following considerations.

For domestic and foreign-based exchanges:

  1. The exchange carries out the normal business of an exchange in listing securities, facilitating the trading, clearing, and settlement of these securities, monitoring and enforcing trades executed on its system, and offering transparent pricing information to the public.
  2. The exchange has acceptable standards for new company listings, including standards that address the number of shareholders, the dispersion of ownership, and for the maintenance of a listing.
  3. The exchange operates within a regulatory framework that meets acceptable standards in relation to investor protection, disclosure requirements, corporate governance, and market integrity, as may be espoused by the International Organization of Securities Commissions (IOSCO).
  4. The exchange has an experienced management and governance team, a successful track record of operations, and sufficient financial resources to ensure long-term viability.
  5. The exchange has a range of listings and adequate liquidity for investors to buy and sell securities at reasonable bid-ask spreads.

For foreign-based exchanges:

  1. The host country of the exchange has commercial, legal and tax relations with Canada, for example, as demonstrated by having entered into a comprehensive tax information exchange agreement or a comprehensive tax treaty.

  2. The host country is a member in good standing in the international financial community through membership in such organizations as the World Trade Organization, the International Monetary Fund, IOSCO, the Financial Action Task Force, or similar bodies.

  3. The securities regulatory and juridical framework of the host country of the exchange provides rights and remedies to Canadian investors, including brokers acting on investors' behalf, which are comparable to those available to investors in Canada.

  4. The exchange is recognized by the host government and other foreign governments, where applicable, for tax purposes comparable to those for designated exchanges under the Canadian Income Tax Act.

  5. The host country of the exchange has a low risk of imposing capital restrictions or other impediments on the liquidation of investments and the repatriation of funds by foreign investors.