| 19(1) | File No. 5-9553 |
| W.C. Harding | |
| (613) 957-8953 |
June 22, 1990
19(1)
This is in reply to your letter of December 8, 1989 concerning the eligibility of Nikkei Stock Index Put Warrants as qualified investments for an RRSP. We apologize for the unavoidable delay in replying, however, as we advised in our previous letter of February 19, 1990 this question has been under review and our position only recently determined.
It is our opinion that a Nikkei Warrant will not be a qualified investment for an RRSP except in respect of a particular time, if any, when it is clearly established that cash would be realized if the warrant was exercised at that time. Accordingly, if the warrants would not give rise to cash if they were exercised on the day they were acquired, subsection 146(10) of the Income Tax Act would apply to require an income inclusion in the hands of the taxpayer and if, at the end of any month, the plan holds a non-qualified investment, a tax under Part XI.1 of the Act would be payable by the plan.
We regret that our reply could not be favourable.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate