Principal Issues: Given the elimination of the foreign content rules under the Income Tax Act, will a pooled fund trust that invests in foreign securities continue to be eligible to be a registered investment for purposes of the Act?
Position: Yes
Reasons: The repeal of Part XI of the Act does not affect the conditions that must be satisfied by a pooled fund trust under paragraph 204.4(2)(a) of the Act.
XXXXXXXXXX 2005-014250 G. Allen September 9, 2005
Dear XXXXXXXXXX:
Re: Registered Investments - Pooled Fund Trust
This letter is a reply to your e-mail sent on July 14, 2005 to Phil Girvin of the Individual Returns and Payments Processing Directorate and further to your telephone conversation with Gary Allen. In your e-mail, you enquire whether a pooled fund trust that invests in foreign securities will continue to be eligible to be a registered investment ("RI") for purposes of the Income Tax Act (the "Act"), given the elimination of the foreign content restrictions under the Act.
Our Comments
The repeal of Part XI of the Act, i.e., the foreign content rules, does not affect the conditions that must be satisfied by a pooled fund trust under paragraph 204.4(2)(a) of the Act in order for a pooled fund trust to be registered as an RI. We note that Bill C-43 has amended the references to section 205 of the Act that were contained in subsection 204.4(2). This was necessary due to Part XI of the Act being repealed effective after December 31, 2004.
We trust our comments will be of assistance.
Yours truly,
Roberta Albert, CA
Manager
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Policy and Planning Branch