Principal Issues: [TaxInterpretations translation]
1. For the purposes of the definition of qualified RRSP investments in section 204 of the Act, what is the meaning of the word "money"?
2. Is a deposit denominated in a foreign currency a qualified RRSP investment?
Position:
1. “Money" means banknotes and coins that are legal tender in the country of issue.
2. Yes if it is a deposit described in paragraph (a) of the definition of qualified investment in section 204 of the Act.
Reasons:
Text of the Act and definition of the word "money" in the Dictionary of Accounting and Financial Management.
November 14, 2002
Individual returns and payments Income Tax Rulings Directorate processing department Trusts and Pensions Section Michel Lambert 957-8953 Attention: Mr.Pierre Beaudry 2002-017137
Qualified investment Registered Retirement Savings Plan (RRSP)
This is further to your email of October 31, 2002, in which you requested clarification of paragraph 14 of Interpretation Bulletin IT-320R2. Specifically, you indicated that this paragraph refers to money denominated in any foreign currency as qualified investments. You asked us to clarify this point. In addition, you wish to know whether deposits denominated in U.S. dollars can be held in an RRSP.
Paragraph (a) of the definition of qualified investment in subsection 146(1) of the Income Tax Act (the Act) stipulates that, in the case of a trust governed by an RRSP, an investment that would be described in paragraph (a) of the definition of qualified investment in section 204 if the references to a "trust" were read as references to the trust governed by an RRSP is a qualified investment.
Paragraph (a) of the definition of qualified investment in section 204 of the Act provides that money (other than money the fair market value of which exceeds its stated value as legal tender in the country of issuance or money that is held for its numismatic value) and deposits (within the meaning assigned by the Canada Deposit Insurance Corporation Act or with a branch in Canada of a bank) of such money standing to the credit of the trust may be a qualified investment for the trust. As stated in paragraph 14 of Interpretation Bulletin IT-320R2, prior to 2003, a deposit also includes an amount on deposit with a bank outside of Canada that is listed in Schedule I or II to the Bank Act.
In our view, "money" means banknotes and coins that are legal tender in the country of issue. We are also of the opinion that deposits referred to in paragraph (a) of the definition of qualified investment in section 204 may be denominated in Canadian dollars or in any foreign currency.
For your information, a copy of this memorandum will be severed using the Access to Information Act and will be available in the Legislative Access Database (LAD) located on the mainframe of the Canada Customs and Revenue Agency. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, the Legislative Access Bank version can be provided. Alternatively, the client may request a severed copy using the Privacy Act criteria, which does not remove client identity. Requests for this latter version should be made by you to Ms. Jackie Page at (819) 994-2898. A copy that has been severed in accordance with the Privacy Act will be sent to you for delivery to the client.
We hope you find these comments of assistance.
Manager
Financing and Plans Section
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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