Regulation 4900

Subsection 4900(1)

Paragraph 4900(1)(b)

Administrative Policy

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

Back-dating rule effective for Reg. 4900(1)(b) purposes

1.24 The post-amble of the public corporation definition in subsection 89(1) allows a new corporation to elect to be deemed to have been a public corporation since its date of incorporation. ...[A]ny otherwise non-qualifying shares or debt obligations of the new corporation acquired by a registered plan between the date of incorporation and the time at which the corporation becomes a public corporation will be a qualified investment from the time they are so acquired. Accordingly, any non-qualified investment taxes that would otherwise apply would be rendered inapplicable.

Instalment receipt

1.67 An instalment receipt reflects a partial payment on property and gives the owner an interest (or for civil law, a right) in that property. If the receipt reflects a partial payment on, for example, a share listed on a designated stock exchange, the interest or right in that share will constitute a qualified investment for the registered plan. For example, a corporation may have an arrangement to sell shares on an instalment basis, where the shares are sold at a predetermined price with a portion of the sale price payable at the time of sale and the balance to be paid at some future date. The purchase and ownership of the shares are evidenced by the instalment receipt issued to the purchaser at the time of the initial payment.

Escrow agreement

1.68 The fact that a security may be subject to an escrow agreement will not in and of itself cause it to be a non-qualified investment for a registered plan... .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 204 - qualified investment - (a) 208
Tax Topics - Income Tax Act - Section 262 113
Tax Topics - Income Tax Act - Section 204 - qualified investment - (d) 320
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

24 June 1994 External T.I. 5-940923 -

Because one of the criteria in s. 131(8)(a) is that the corporation be a public corporation, a share of a mutual fund corporation will be a qualified investment for an RRSP.

23 February 1994 External T.I. 5-940225 -

A corporation can verify its status as a public corporation through the District Office at which it files its returns. Many RRSP trustees will accept such confirmations as evidence of a corporation's shares eligibility for an RRSP.

1 June 1993 External T.I. 5-930642 -

Shares represented by an instalment receipt and that are pledged to a seller of shares to secure the obligation of the holder to pay the unpaid purchase price for the share will be a qualified investment provided the shares of the corporation are listed for trading on a prescribed stock exchange.

13 January 1993 T.I. (Tax Window, No. 28, p. 18, ¶2397)

The delisting of a share, the suspension of its trading or the bankruptcy of the corporation will generally not cause the share to become an ineligible investment.

7 April 1992 T.I. (Tax Window, No. 18, p. 18, ¶1867)

Escrowed shares may constitute a qualified investment.

7 November and 19 December 1990 T.I. (Tax Window, Prelim. No. 2, p. 19, ¶1060)

Where shares of a corporation are not qualified at the time of acquisition because the corporation is not a public corporation, they cannot become qualified investments even if the corporation subsequently makes a valid election under s. 89(1)(g). However, where the trust acquire shares on a particular day and sometime during the same day the corporation becomes a public corporation, the shares will be qualified investments.

4 July 1989 T.I. (Dec. 89 Access Letter, ¶1058)

Shares of a class which are not listed on an exchange are qualified investments where shares of another class of the corporation are listed.

Paragraph 4900(1)(d)

Administrative Policy

11 January 2002 External T.I. 2001-010674 -

Units from a mutual fund trust's different classes of units will satisfy Regulation 4900(1)(d) even if a particular class does not satisfy the conditions in Regulation 4801.

Paragraph 4900(1)(d.1)

Administrative Policy

4 December 2000 External T.I. 2000-005436 -

"Since debts of a public corporation that only has one class of shares that trade on a prescribed stock exchange will be a qualified investment under paragraph 4900(1)(c.1) of the Regulations, it must have been intended that debts of a mutual fund trust with one class of units that trade on a prescribed stock exchange will also be a qualified investment under paragraph 4900(1)(d.1) ... ."

Paragraph 4900(1)(e)

Administrative Policy

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

Writing puts and calls not subject to rules

1.40 When writing put and call options ... , no property is actually acquired by the option writer at the time the option is sold besides the option premium. ... Therefore, option writing, in and of itself, is generally not subject to the qualified investment rules. ...

Deposits of cash to cover margin requirements

1.43 ... [A]n option writer may be required to deposit cash with their brokerage firm to cover their obligation under the option agreement. As noted in ¶1.15, if the deposit is left with the broker for longer than a few days, the deposit would not be a qualified investment. ...

Advantage tax

1.44 The advantage tax in section 207.05 could apply if an RRSP, RRIF or TFSA trust were to engage in certain option transactions. For example, this would be the case where:

  • the counterparty to the option contract does not deal at arm's length with the annuitant or holder, or
  • the contract does not reflect commercial terms, which serves to artificially shift value into or out of the registered plan.
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 204 - qualified investment - (a) 208
Tax Topics - Income Tax Act - Section 262 113
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 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

15 March 2010 External T.I. 2009-0345001E5 - Qualified Investment for a RRSP

subscription receipts where corporation not yet public

Are subscription receipts issued by a private Canadian corporation qualified investments under Reg. 4900(1)(e) if they entitle the holder to acquire treasury shares of the corporation after they become listed on a designated stock exchange? CRA stated:

[T]his paragraph requires that the underlying property to be acquired by the option, warrant or similar right must be a qualified investment the entire time the subscription receipt is held by the trust governed by an RRSP.

...[T]he underlying properties of the subscription receipts are treasury shares of a corporation which will only be a qualified investment when they become listed on a designated stock exchange. Therefore...until the treasury shares are listed on a designated stock exchange, the subscription receipts would not provide the right to acquire properties that are qualified investments and would not be qualified investments pursuant to paragraph 4900(1)(e)... .

1 August 2007-T.I. 0247291E5 [right under subscription receipt to receive cash]

right under subscription receipt to receive cash

Are subscription receipts that provide the holder with the right to receive a cash settlement in lieu of delivery of the underlying property, qualified investments? CRA stated:

Generally, money and deposits of money will be considered to be a qualified investment provided the money is legal tender in Canada. Therefore…a subscription receipt would not be precluded from qualifying as a qualified investment under paragraph 4900(1)(e.01) solely because it provides the holder with the right to receive a cash settlement in lieu of delivery of the underlying property.

24 March 1997 T.I. 970578 [special warrant before prospectus cleared]

special warrant before prospectus cleared

The underlying property must be a qualified investment throughout the period that the warrant or right is held by the RRSP. Accordingly, where the shares that can be acquired on the exercise of a special warrant will not be qualified investments until a prospectus has been cleared, the special warrants will not be qualified investments until that time.

31 October 1996 T.I. 962433 (C.T.O. "RRSP Options")

Because shares of a corporation listed on a prescribed stock exchange outside of Canada are qualified investments under paragraph (a) of the definition of "qualified investment" in s. 146(1), employees can transfer their options to acquire shares of their parent corporation traded on the New York Stock Exchange to their RRSPs.

30 January 1995 T.I. 943068 (C.T.O. "RRSP Qualified Investments - Puts & Calls")

Index options are not qualified investments for an RRSP except in respect of the particular time, if any, when it can be clearly established that cash will be realized if the options are exercised at that time.

27 October 1994 Internal T.I. 7-942158 -

A stock index futures contract is not a qualified investment for a deferred income plan or a prescribed investment for a registered investment.

27 October 1994 T.I. 942710 (C.T.O. "Options as RRSP Qualified Investments")

If the subject of a call option is a qualified investment, the call options is a qualified investment. However, a put option is property which is not a qualified investment.

24 October 1994 T.I. 942630 (C.T.O. "Convertible Debentures as Qualified Investments")

A debenture that is convertible into shares of an eligible corporation or shares of a small business corporation will not qualify under Regulation 4900(1)(e) as a right to acquire a qualified investment.

31 August 1994 External T.I. 5-942019 -

TSE 35 index warrants "would not be qualified investments for an RRSP except in respect of a particular time, if any, when it can be clearly established that cash would be realized if the warrants are exercised at that time".

19 May 1993 T.I. (Tax Window, No. 31, p. 5, ¶2512)

A put option is not a qualified investment as it is a right to dispose of, rather than to acquire, a security.

92 C.R. - Q.51

A "poison pill" warrant that cannot be severed from the share to which it relates and that, therefore, cannot itself be listed, will not be a qualified investment. However, this will only be of significance in cases where the poison pill warrant has a value, which is not usually the case.

31 July 1991 T.I. (Tax Window, No. 7, p. 21, ¶1380)

Rights of shareholders to acquire additional shares at a discount in the event of a take-over bid do not meet the requirements of Regulation 4900(1)(e) prior to the occurrence of the take-over bid. If the bid occurs, the right would only qualify if the requirements of Regulation 4900(1)(e) were met at that time.

6 June 1990 T.I. (November 1990 Access Letter, ¶1540)

Nikkei put warrants are not qualified investments because they do not give the owner the right to acquire a qualified investment at all times.

19 April 1990 T.I. (September 1990 Access Letter, ¶1431)

Re eligibility of listed warrants or call options.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 146 - Subsection 146(4) 37

Read, "Technical Matters", 89 C.R. p. 783

Where in an issue of shares and warrants, separate trading of the warrants and shares for a period of time, typically thirty days, is prohibited for security law reasons, during such period the warrants are not qualified investments.

Articles

Leslie Morgan, "Warrants, Rights and Options as Qualified Investments", Corporate Finance, Vol. XII, No. 1, 2004, p. 1158.

Paragraph 4900(1)(g)

Administrative Policy

25 June 1991 T.I. and May 1991 Question and Answer (Tax Window, No. 3, p. 23, ¶1225)

Bonus interest paid by a credit union on invested funds which remain in the RRSP will not cause the investment to be non-qualified, nor will a patronage rebate which is paid directly into the plan.

Paragraph 4900(1)(i)

Administrative Policy

12 May 1995 T.I. 951310 ("Registered Charity Debentures for RRSP")

Debentures issued by a non-profit, non-share corporation that are not guaranteed by any third party will not be qualified investments.

11 October 1994 Memorandum 941714 (CTO RRSP Qualified Investment in Debentures") and 13 September 1994 GAAR Committee Report 941714 (CTO "Debt Invested in U.S. as RRSP Qualified Investment")

A debenture from a Canadian subsidiary of a corporation whose shares are listed on the Vancouver Stock Exchange is a qualified investment for an RRSP notwithstanding that the proceeds of the debenture are loaned by the subsidiary to a non-listed foreign corporation.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 206 - Paragraph 206(1)(d.1) 156

21 December 1993 T.I. HAA7255-7 (C.T.O. "Interest in a Bond as Qualified Investment for RRSP")

"An 'interest' in a bond or similar obligation that is a qualified investment for an RRSP pursuant to paragraph 4900(1)(i) of the Income Tax Regulations may also be such a qualified investment if the holder of the interest would have the same rights as a direct holder of the bond but for the interposition of an agent or bare trustee".

Paragraph 4900(1)(j)

See Also

Stewart v. The Queen, 2019 TCC 22

mortgage secured by largely worthless land was a mortgage

A corporation that was unrelated to the taxpayers (“Zowtra”) granted a mortgage for $1.8 million (the “Zowtra Mortgage”) on Alberta lands that it had purchased for $5,000 to an Edmonton finance company (“U‑Have”) controlled by the same individual as Zowtra. U-Have sold undivided interests in this mortgage (bearing interest at 12%) to the self-directed RRSPs of 35 individuals, including the taxpayers, for $1.8 million in cash. The $1.8 million mortgage and these mortgage transfers were registered with the Alberta Government Services Land Titles Office. U-Have then paid the $1.8 million received by it to Zowtra. Apparently, essentially all the funds were transferred outside Canada (with none recovered by the RRSPs) or used to pay fees.

In finding that each purchased interest qualified as a “a mortgage secured by real property situated in Canada, or an interest therein” and, thus, as a qualified investment under former Reg, 4900(4), D'Arcy J stated (at paras. 55, 57):

The term mortgage is not defined in the Income Tax Act. During the relevant period, the Alberta Land Titles Act defined mortgage as meaning “a charge on land created merely for securing a debt or loan”.

… In my view, when the appellants’ RRSPs acquired the undivided interests in the Zowtra Mortgage the relevant RRSPs acquired an interest in a mortgage, that is, an interest in “a charge on land created . . . for securing a debt or loan”. As a result, the investment by the RRSPs in the Zowtra Mortgage was a qualified investment.

Words and Phrases
mortgage
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 146 - Subsection 146(9) - Paragraph 146(9)(b) mortgage issued in scam had full FMV until the funds were stolen 395
Tax Topics - General Concepts - Fair Market Value - Other mortgage issued in a scam had full FMV 228

Administrative Policy

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

Acquisition of real estate on default

1.34 Real or immovable property is not a qualified investment for a registered plan. However, a registered plan might acquire real or immovable property in order to protect a mortgage or hypothecary investment that is in default. In this case, the CRA will not apply any adverse tax consequences (as described in ¶1.69 - 1.80) provided the property is offered for sale under reasonable conditions and sold within one year. A longer time frame might be possible in unusual circumstances. Any legal fees incurred for foreclosure, power of sale or other proceedings necessary to protect the investment are expenses of, and must be paid by, the registered plan. If the expenses are paid by the annuitant, holder or subscriber of the plan or by someone else, they would be treated as a contribution or gift to the plan and could give rise to adverse tax consequences. ...

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 204 - qualified investment - (a) 208
Tax Topics - Income Tax Act - Section 262 113
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.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

13 July 1994 Internal T.I. 7-941572 -

Two RRSPs can each hold an interest in a single mortgage provided each interest is owned by the respective RRSP and all of the remaining conditions for holding non-arm's length mortgages in an RRSP, as described in IT-320R2, are met.

7 February 1994 External T.I. 5-940061 -

A mortgage on a business property can be a qualified investment for an RRSP even where the mortgagor and the annuitant do not deal at arm's length, if the specific requirements of Regulation 4900(1)(j) are met.

Paragraph 4900(1)(j.1)

Administrative Policy

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

Approved lender/market interest

1.36 ... The list of approved lenders is available on the CMHC website. The interest rate and other terms must reflect normal commercial practice and the mortgage or hypothec must be administered by the approved lender in the same manner as a mortgage or hypothec on property owned by a stranger. ...

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 204 - qualified investment - (a) 208
Tax Topics - Income Tax Act - Section 262 113
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 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

1 June 2016 External T.I. 2015-0601211E5 - Mortgage loan from RRSP to make a shareholder loan

use of qualified mortgage loan proceeds of no import

An individual, who is an RRSP annuitant, borrows the “Mortgage Loan” from the RRSP, with a principal residence mortgage granted in favour of the RRSP as security. The Mortgage Loan would be administered by an approved lender under the National Housing Act and would be insured as required by Reg. 4900(1)(j.1) by an approved private insurer. The Mortgage Loan proceeds would be used to make an interest-free shareholder loan to a corporation (the “Corporation”) in which the individual held shares and controlled, with the Corporation paying off a corporate line of credit. Is the Mortgage Loan a qualified investment, and is the individual’s use of the funds received on the Mortgage Loan to make the shareholder loan an eligible use of the RRSP’s property? Before going on to address the advantage and prohibited investment rules in Part XI.01, and after indicating that the Mortgage Loan would be a qualified investment under Reg. 4900(1)(j.1), CRA stated:

There are no express restrictions under paragraph 4900(1)(j.1)…on the individual’s use of the funds received on the Mortgage Loan.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) money borrowed by individual from RRSP to make interest-free loan to corporation 175
Tax Topics - Income Tax Act - Section 207.01 - Subsection 207.01(1) - Advantage - Paragraph (a) 4900(1)(j.1) insurance requirements generally arm's length/potential advantage on default 239
Tax Topics - Income Tax Act - Section 207.01 - Subsection 207.01(1) - Registered Plan Strip 4900(1)(j.1) mortgage loan unlikely to be acquired at less than FMV 217

Paragraph 4900(1)(p.1)

Articles

D. Louis, "Trick or Treat? - RRSPs and Foreign Index Units", The Estate Planner, No. 46, November 13, 1998, p. 6.

Paragraph 4900(1)(u)

Administrative Policy

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

RCM coins

1.52 A legal tender gold or silver bullion coin produced by the Royal Canadian Mint with a minimum purity of 99.5% for gold and 99.9% for silver is a qualified investment. ... the coin must be purchased directly from the Mint or from a Canadian-resident corporation that is a bank, trust company, credit union, insurance company or registered securities dealer whose business activities are regulated by the Superintendent of Financial Institutions or a similar provincial authority (referred to ... as a specified corporation).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 204 - qualified investment - (a) 208
Tax Topics - Income Tax Act - Section 262 113
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)(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

Paragraph 4900(1)(v)

Administrative Policy

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

RCM certificates

1.54 A gold or silver certificate issued by the Royal Canadian Mint or a specified corporation is a qualified investment if the bullion represented by the certificate satisfies the conditions described in ¶1.52 or ¶1.53. In addition, the certificate must be purchased directly from the issuer or from a specified corporation.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 204 - qualified investment - (a) 208
Tax Topics - Income Tax Act - Section 262 113
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 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

Subsection 4900(2)

Administrative Policy

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

Sub of rating agency may be accepted

1.31 ... Where the facts, corporate structure and legal relationship make it clear that a listed rating agency recognizes and would stand by the rating given by its subsidiary or affiliate, then the condition that the rating be with a prescribed credit rating agency would be satisfied.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 204 - qualified investment - (a) 208
Tax Topics - Income Tax Act - Section 262 113
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(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

designated shareholder

Administrative Policy

22 February 1990 T.I. (July 1990 Access Letter, ¶1337)

Where one of a group of employees owns 49% of the shares of the corporation, another unrelated employee owns 5%, and the remaining voting shares are widely held with no employee owning more than 2% of the shares, all the shareholders/employees will be designated shareholders unless the corporation is factually controlled by the shareholder/employee who owns 49% of the voting shares. The designated shareholder rules may apply at any time.

Subsection 4900(4)

Cases

Millward v. The Queen, 86 DTC 6538, [1986] 2 CTC 423 (FCTD)

A company owned by the taxpayer mortgaged land in favour of an RRSP of the taxpayer's partner ("Coates") in his law firm and a company owned by Coates and his wife mortgaged land in favour of the taxpayer's RRSP. The mortgages were for the same term and amount, and bore less than a commercial rate of interest. The taxpayer in accepting the land of Coates' company as security relied on Coates' assertion that it constituted adequate security, without further investigation.

Due to the reciprocal nature of the transaction, it was not governed by market factors and was instead governed by the common interest of the taxpayer and Coates. They accordingly did not deal at arm's length and the mortgage was not a qualified investment.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) acting in concert where mutual back scratching 128

The Queen v. Epstein, 84 DTC 6259, [1984] CTC 270 (FCTD)

It was held that the word "mortgagor" in an ancestor of regulation 4900(4) should be taken to refer only to the person who first grants the mortgage, rather than also to an assignee of the mortgagor. It was stated that this regulation was "a means to prevent an original mortgagor who is not dealing with the mortgagee at arm's length from granting an improvident mortgage on business or investment property at an excessive rate of interest".

Words and Phrases
mortgagor

Administrative Policy

19 September 1996 External T.I. 5-962988 -

Where a building built by a lessee on land situate in Canada qualifies as a leasehold interest or other real property, rather than as a chattel, RC is prepared to accept that a mortgage granted by the lessee in respect of its leasehold interest will be a qualified investment for an RRSP if the other requirements of Regulation 4900(4) are satisfied.

21 July 1995 T.I. 951609 (C.T.O. "Non-Recourse Mortgage")

A non-recourse mortgage secured by real property is considered a mortgage for purposes of Regulation 4900(4).

8 February 1994 External T.I. 5-940019 -

A mortgage will be a qualified investment for an RRSP where the annuitant is a member of a church and the church is the mortgagor, provided that the annuitant deals at arm's length with the church (or the mortgage qualifies under Regulation 4900(1)(j)). Where the parties deal at arm's length, there is no particular requirement respecting the timing and amount of interest payments on the mortgage.

26 November 1992 T.I. 923059 (September 1993 Access Letter, p. 422, ¶C144-237)

An investment of an RRSP in a fund that invested only in mortgages, where there was no evidence that the fund would hold the mortgages as nominee or agent for the RRSP, would not be a qualified investment.

8 February 1991 T.I. (Tax Window, Prelim. No. 3, p. 22, ¶1118)

The greater the difference between the relevant commercial interest rate at the time of a mortgage loan and the interest rate offered, the more likely the participation payments on the mortgage will be considered equity payments as opposed to interest payments, in which case the participating mortgage will not be a qualified investment.

11 January 1991 T.I. (Tax Window, Prelim. No. 3, p. 22, ¶1089)

Where an RRSP becomes a mortgagee in possession and is required to make expenditures to maintain the property, if such payments are added to the principal of the mortgage and bear interest they are part of the mortgage loan and are therefore eligible investments.

Subsection 4900(6)

Administrative Policy

18 April 1990 T.I. (September 1990 Access Letter, ¶1430)

Re eligibility of the shares of a Quebec business investment company.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Fair Market Value - Shares 49

2 November 89 T.I. (April 1990 Access Letter, ¶1191)

A person's dual status as both an employee and a shareholder of a corporation will not by itself cause the share to lose its status as a qualified investment. In order for s. 4900(8) to apply, it must be reasonable to consider that an amount received in respect of the share is on account of, and lieu of, or in satisfaction of payment for services provided by the employee-shareholder. This will be a question of fact.

Subsection 4900(12)

Administrative Policy

2001 Ruling 2001-007052 -

Shares of a corporation that was in the process of developing a parcel of land into a retirement community with a view to selling homes and apartments to individuals who would be interested in living in the retirement community, would qualify under Regulation 4900(12)(a).

Income Tax Technical News, No. 9, 10 February 1997

Where two unrelated shareholders each own 50% of the shares of a corporation, the fact that they used their own RRSPs to acquire shares of the corporation is not by itself an indication that they do not deal at arm's length with the corporation immediately after the acquisition, even though the corporation will be controlled by the group consisting of the two shareholders since they generally would act in concert.

2 September 1994 External T.I. 5-942028 -

General discussion.

Subsection 4900(13)

Administrative Policy

1996 A.P.F.F. Round Table 7M12910 (Item 4.4.3)

One cannot conclude simply from the fact that a start-up corporation pays little salary to an individual who is a beneficiary of an RRSP holding dividend-paying shares of the corporation that Regulation 4900(13) applies. However, such an inference might be made where employees performing similar tasks but not holding shares through their RRSPs are better paid.

Subsection 4900(15)

Administrative Policy

22 November 2012 External T.I. 2012-0441781E5 F - Prohibited Investment - Cooperative

application to shares of cooperative

Respecting whether shares of a co-operative corporation may be prohibited investments under s. 207.01(1)(d) of the definition "prohibited investment," CRA stated:

[S]ection 5001 of the Regulations clarifies that property that is a qualified investment because of subsection 4900(14) is prescribed property for the trust at any time if, at that time, it is not described in any of subparagraphs 4900(14)(a)(i) to (iii). This could be the case where a cooperative share qualifies as a qualified investment at the time it was acquired by the trust and after that acquisition, the cooperative ceases to be a specified cooperative corporation within the meaning of subsection 4901(2) of the Regulations.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Shareholder investor in cooperative holds shares and is shareholder 172
Tax Topics - Income Tax Act - Section 207.01 - Subsection 207.01(1) - Prohibited Investment - Paragraph (b) - Subparagraph (b)(i) share of cooperative can be a share of corporation for prohibited investment purposes 66

Navigation