| 19(1) | File No. 5-9290 |
| A.B. Adler | |
| (613) 957-8962 |
January 16, 1990
Dear Sirs:
Your letter dated October 25, 1989, addressed to the Surrey Taxation Centre, was recently referred to this office for reply.
You requested clarification whether, in the case of non-arm's length RRSP mortgages investments, it is acceptable to grant such a mortgage with a 2% variance of relevant current rates without affecting the eligibility of the mortgage as a qualified investment for an RRSP. Further, you requested our views whether it would be acceptable for such a mortgage to have an interest rate that is comparable with the rate of interest rate that is comparable with the rate of interest provided under certain unsecured savings accounts.
We would refer you to paragraph 8 of the Special Release to Interpretation Bulletin IT-320R dated may 25, 1984 (copy enclosed). As indicated therein, in the case of a non-arm's length mortgage investment for an RRSP, we expect the amount of the mortgage interest rate thereon to reflect normal commercial practice.
We trust that our comments are sufficient for your purposes.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate