Regulation 5000

Subsection 5000(1)

Administrative Policy

14 February 1994 Internal T.I. 5-933665 -

In response to an expressed concern that a trust or corporation could inadvertently have excess foreign property where it undertook to simultaneously acquire or dispose of more than one property but had to record the transactions at different times because of the way the transactions were actually processed, RC indicated that although the wording of the regulation was clear (the 20% limitation could not be exceeded even for a moment), it recognized that there may be reason to provide relief where simultaneously initiated transactions are recorded at different times due solely to the application of routine procedures.

Subsection 5000(1.2)

Administrative Policy

14 November 1996 T.I. 963760 (C.T.O. Interest in Pooled Fund/Master Trust")

Where a pooled fund trust also is a master trust, an interest in the pooled fund trust will not be foreign property regardless of its status as a master trust.

Subsection 5000(2)

Administrative Policy

1996 Ruling 961677 (C.T.O. "Swap Contract, Marketable Security")

The cost amount to a fund of its investments in exchange-traded futures contracts is equal to the brokerage fees and other costs incidental to entering into the contracts and does not include an amount in respect of the contract price or the amount paid, if any, as initial or variation margin.

Subsection 5000(7)

Pooled Fund Trust

Administrative Policy

31 May 1999 T.I. 990891

Where a trust is established with two trust companies, both trustees should qualify as a trust company incorporated under the laws of Canada or a province.

1997 Ruling 3-971192 -

Favourable ruling given that a partnership that otherwise qualified as a qualified limited partnership would not cease to so qualify if it received commitment fees, standby fees and completion fees, paid a management fee to the general partner and paid insurance premiums for maintaining a surety bond against potential losses resulting from gross negligence or fraud of the general partner, employees or officers and agents.

17 May 1995 T.I. 950389 (C.T.O. "Second Relevant Year for Pooled Fund Trust Tests")

General discussion of the addition of references to the "second relevant year".

18 April 1995 T.I. 950089 (C.T.O. "Pooled Fund Trusts")

The cost amount of a futures contract at the time it is entered into or acquired is equal to the brokerage fees and other costs incidental to entering into or acquiring the contract, and would not include amounts paid as the initial or variation margin.

Exchange-traded stock index futures, bond futures, interest rate futures and commodity futures normally represent marketable securities. Generally, the acquisition of an exchange-traded put or call option would represent the acquisition of a marketable security.

Cash includes foreign currency that is legal tender in the country of origin, and a deposit with a bank or trust company, provided the depositor has the right to withdraw the money on deposit at anytime. A deposit left with a securities broker may be considered as being a cash deposit only if it is left with the broker for no more than one or two days. A margin deposit would otherwise be considered as a debt security and would not generally qualify as a security or marketable security.

10 February 1995 External T.I. 5-943179 -

"The term 'marketable security' refers generally to a security that is capable of reasonably prompt conversion into cash and that is easily traded because a ready market exists and there are no legal impediments to its trade."

Words and Phrases
marketable securities

6 October 1994 External T.I. 5-942074 -

"A Trust that is prescribed to be a master trust under section 5001 of the Income Tax Regulations ("Regulations") and that elects to be such a trust pursuant to paragraph 149(1)(o.4) of the Income Tax Act, can also be a pooled fund trust under subsection 5000(7) of the Regulations".

19 June 1992 External T.I. 5-921587 -

A unit which was acquired in a year throughout which the trust does not meet the required conditions will not be an interest in a pooled fund trust.

21 May 1991 T.I. (Tax Window, No. 3, p. 32, ¶1261)

The lending of qualified securities by a pooled fund trust as a result of a securities lending arrangement will constitute the investing of funds of the trust for purposes of Regulation 5000(7)(b); and amounts received by the trust in lieu of dividends and interest, and the fees earned for loaning the securities, will be amounts "derived" from the securities for purposes of Regulation 5000(7)(b).

Articles

Krasa, "Income Tax Implications of Joint Investment by Pension Plans through a Private Pooled Fund Vehicle", 1997 Canadian Tax Journal, Vol. 45, No. 1, p. 1.

Qualified Limited Partnership

Administrative Policy

2002 Ruling 2002-013816 -

The terms of the partnership agreement that provided that a limited partner would be excused or excluded from or to pay a particular investment would not result in loss of qualification as a qualified limited partnership until such right was exercised.

2000 Ruling 1999-000857 -

An arrangement under which a general partner had the right to catch-up earnings after the limited partners were paid an initial return and before the balance of the profits were allocated to the limited partners did not result in the partnership not being a qualified limited partnership. The receipt by the partnership of commitment, standby, completion and guarantee fees did not contravene the investment-undertaking requirement in Regulation 5000(7)(f).

24 October 1996 T.I. 962987 (C.T.O. "30% Limited Partner Interests")

A limited partnership which is formed with one general and one nominee limited partner prior to a public offering will not qualify under Regulation 5102(1)(e) or under paragraph (e) of the definition of "qualified limited partnership" in Regulation 5000(7).

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