We are writing in reply to your letter dated December 10, 1990 concerning losses of investors in
24(1)
You refer to the letter of December 21, 1989 which sets out the Department's position on certain income tax issues affecting investors. You note that while one section of the Department's letter discusses the issue of losses, there is no discussion of losses in the section dealing with 24(1) investment contracts held in, or as, a registered retirement savings plan ("RRSP").
There is no provision in the Income Tax Act which permits a deduction in respect of losses incurred in an RRSP. The income tax treatment is essentially that any amount received under an RRSP must be included in income. Should it happen that the total amount received from the RRSP is less than the total amount contributed, it is only the amount received which is included in income not the amount of the contributions made even though those contributions were fully deductible for tax purposes when made.
In the case of 24(1) the Department has recently received a submission from 24(1) This is presently being considered and we hope to be able to respond in the near future. It is our understanding that 24(1) intends to advise note holders accordingly.
We hope this will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate