| 24(1) | File No. 5-9224 |
| D. Duff | |
| (613) 957-3498 | |
| 19(1) |
May 1, 1990
Dear Sirs:
Re: Prescribed investments for a Registered Investment
This is in response to your letter of November 27, 1989, wherein requested confirmation that your investment in a future contract traded on the 24(1) would be a prescribed investment pursuant to paragraph 4900(1)(e) of the Income Tax Regulations, for a registered investment, registered under paragraph 204.4(2)(d) of the Income Tax Act (the Act). In addition, you wanted confirmation that, for purposes of Regulation 4900(1)(e), prescribed stock exchange in Canada has the meaning given in Regulation 3200.
To be accepted for registration under paragraph 204.4(2)(d) of the Act, a trust must hold investments prescribed according to Regulation 4901(1). This regulation describes prescribed investments as those properties that would be a qualified investment for the plan or fund in respect of which the trust was seeking registration. Therefore, whether an investment is prescribed will depend on whether the trust was seeking registration in respect of a registered retirement savings plan, a registered retirement income fund or a deferred profit sharing plan.
You stated that the investment would qualify under Regulation 4900(1)(e) on the basis that a right would include a futures contract. To qualify under Regulation 4900(1)(e) the right must be listed on either the Toronto Futures Exchange or a prescribed stock exchange in Canada and the property acquired by exercising the right must be a qualified property for the plan or fund. Whether the 24(1) is part of the 24(1) is a question of fact and a matter upon which we will not comment. Furthermore, assuming that it is, the qualification of a particular futures contract will also depend on whether the contract is a right giving the owner the right to acquire property that itself would be a qualified investment for that owner.
Finally, we can confirm that a prescribed stock exchange in Canada, referred to in Regulation 4900(1)(e), has the meaning given in Regulation 3200. We have notified our Current Amendments and Regulations Division that the preamble to Regulation 3200 does not refer to Regulation 4900(1)(e).
We trust this will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate