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: Whether units of XXXXXXXXXX are not foreign property.
Position: Do not know.
Reasons: We would need more information; however, we can provide general rules.
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Herb Dhaliwal, Minister of National Revenue, has asked me to reply to your letter of November 8, 1998, concerning the classification of the investment in XXXXXXXXXX by your Registered Retirement Savings Plan (RRSP) as foreign property. You do not believe that this investment should be categorized as foreign property and have asked that the penalties levied on your RRSP for holding excess foreign property be cancelled.
We cannot provide definitive comments on the classification of these partnership units as foreign property since we do not have sufficient information on the structure and activities of this limited partnership to make such a determination. It is likely though, that the units of a limited partnership engaged in an active business would be classified as “foreign property” for purposes of the Income Tax Act.
We wish to note, however, that on January 28, 1999, the Department of Finance proposed modifications to the rules governing the classification of property as “foreign property” for income tax purposes (copy enclosed). It is proposed that, after 1997, units in designated Canadian-based limited partnerships be excluded from treatment as foreign property. If your investment meets these new designated limited partnership rules, their retroactive application will eliminate the penalties levied on your RRSP after 1997.
We suggest you contact the administrator of your RRSP to ensure they are aware of this information. You may also contact the individual’s listed in the Department of Finance’s press release should you have any questions on this proposed amendment.
I trust you will find my comments helpful.
Yours sincerely,
Bill McCloskey Assistant Deputy Minister Policy and Legislation Branch
Fouad Daaboul
983096
957-2087
February 16, 1999