| 19(1) | File No. 7-4335 |
| Maureen Shea-DesRosierss | |
| (613) 957-8953 |
October 12, 1989
Dear Sirs:
This is in reply to your letter of August 31, 1989 addressed to the St. Catherines District Office which was forwarded to us for reply.
It is a question of fact whether a certain type of transaction is a mortgage that would be a qualified investment pursuant to paragraph 146(1)(g) of the Income Tax Act and Part XLIX of the Income Tax Regulations ( the "Regulations").
The Income Tax Act does not define the terms "mortgage" or "real property" and it is therefore necessary to consult the various provincial statutes for the applicable law to determine what constitutes a mortgage.
For the purpose of subsection 4900(4) of the Regulations, a mortgage secured by real property situated in Canada, or an interest therein, is a qualified investment for a registered retirement savings plan unless the mortgagor is the annuitant under the plan or is a person with whom the annuitant does not deal at arm's length.
A mortgage may also be a qualified investment by virtue of paragraph 4900(1)(j) of the Regulations provided it is in respect of real property situated in Canada, is insured either under the National Housing Act, or by a corporation offering its services to the public in Canada as an insurer of mortgages, and is administered by an approved lender under the National Housing Act.
We trust these comments will be of assistance to you.
Yours truly,
DirectorFinancial Industries DivisionRulings Directorate