Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Qualified investment for RRSP
Position TAKEN:
Mortgage is not a qualified investment for an RRSP where the mortgagor is the spouse of the son of the annuitant
Reasons FOR POSITION TAKEN:
Regulation 4900
ADM'S OFFICE
RETURN TO RULINGS, 15TH FLOOR, 25 NICHOLAS STREET
AUTHOR
SUBJECT OR CORPORATE CASE FILE
Signed on January 11, 1995
XXXXXXXXXX
Dear XXXXXXXXXX:
This is in response to your letter of October 31, 1994, requesting my opinion whether a mortgage secured by properties owned by XXXXXXXXXX would be a qualified investment for a registered retirement savings plan (RRSP) of XXXXXXXXXX
Under the Income Tax Act (the Act) a spouse of an individual includes a person of the opposite sex who is cohabiting with the individual and either, has cohabited with the individual for at least a year, or, is a parent of a child of the individual. If XXXXXXXXXX meets this criteria she is the spouse of XXXXXXXXXX and therefore, does not deal at arm's length with his mother, XXXXXXXXXX.
Under the Income Tax Regulations, a mortgage can be a qualified investment for an RRSP or a registered retirement income fund (RRIF) if, among other conditions, the mortgagor and the annuitant deal with each other at arm's length. Unfortunately in this situation, the mortgagor, XXXXXXXXXX and the annuitant, XXXXXXXXXX do not deal at arm's length, so the mortgages would not be qualified investments for either the RRSP or the RRIF.
I understand that XXXXXXXXXX spoke with David Duff, a senior rulings officer, on November 24, 1994 regarding this issue. As Mr. Duff explained, the Act is very specific on this matter and does not permit the Department any discretion to consider this a qualified investment for an RRSP.
I trust my comments will assist you in your reply to your constituent.
Yours sincerely,
David Anderson, P.C., M.P.
D. Duff
957-2131
943000
December 19, 1994