Principal Issues: Are shares of a particular corporation a qualified investment for a trust governed by an RRSP?
Position: Question of fact. Provided general comments.
Reasons: In the context of a technical interpretation, we cannot comment whether shares of a particular corporation are a qualified investment.
XXXXXXXXXX 2008-030143
G. Allen
March 16, 2009
Dear XXXXXXXXXX :
Re: RRSP Qualified Investments - Shares
This letter is further to your letter dated November 20, 2008 and your telephone conversations (Allen/XXXXXXXXXX ) concerning whether the shares of a particular corporation whose shares are publicly traded are a qualified investment for a registered retirement savings plan (RRSP).
In your letter you outlined what appears to be an actual existing situation or proposal. Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advanced Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant tax services office. The following comments are, therefore, of a general nature and are not binding on the Canada Revenue Agency (CRA). All publications referred to herein can be accessed on the CRA website at the following address: http://www.cra-arc.gc.ca/formspubs/menu-eng.html.
The CRA's general views concerning qualified investments for RRSPs are contained in Interpretation Bulletin IT-320R3, "Qualified Investments - Trusts Governed by Registered Retirement Savings Plans, Registered Education Savings Plans and Registered Retirement Income Funds." In particular, paragraph 5 of IT-320R3 provides information concerning publicly traded shares and shares of public corporations. Please note that the reference in paragraph 5 to "a prescribed stock exchange" should now be read as "a designated stock exchange".
A share of a corporation that is listed on a designated stock exchange at the time that the share is acquired by an RRSP trust will be a qualified investment. The list of designated stock exchanges can be found on the Department of Finance's website at http://www.fin.gc.ca/act/fim-imf/dse-bvd-eng.asp. Please note that the National Association of Securities Dealers Automated Quotation System (NASDAQ) Over-the-Counter (OTC) Bulletin Board facility is not on the list. Accordingly, securities listed on the NASDAQ OTC Bulletin Board are generally not qualified investments. However, where a corporation's shares are not listed on a designated stock exchange, but the corporation is a "public corporation" as defined in subsection 89(1) of the Income Tax Act (other than a mortgage investment corporation), the corporation's shares will be a qualified investment pursuant to paragraph 4900(1)(b) of the Income Tax Regulations. For comments on the meaning of "public corporation", we would refer you to IT-391, "Status of Corporations".
We trust the above comments are of assistance.
Mary Pat Baldwin, CA
for Director
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch