| 24(1) | 5-900485 |
| B.G. Dodd | |
| (613) 957-9769 | |
| 19(1) |
October 18, 1990
Dear Sirs:
We are writing in reply to your letter dated April 18, 1990 concerning the meaning of the word "cash" in subparagraph 130(3)(a)(ii) of the Income Tax Act (the "Act"). We apologize for the delay.
It is our view that a non-assignable interest bearing certificate of deposit from a Canadian (resident) bank which is denominated in a foreign currency which foreign currency is not subject to any exchange restrictions and is readily convertible into Canadian currency and which subject perhaps to a reduced interest rate, permits the depositor to redeem it at any time before maturity for an amount equal to the face amount of the certificate would generally be considered "cash" for the purposes of subparagraph 130(3)(a)(ii) of the Act. It is also our view that any foreign currency gain or loss realized with respect to the certificate of deposit would be relevant in computing income "derived from, or from dispositions of" cash as contemplated in subparagraph 130(3)(a)(iii) of the Act.
We note that although such a certificate of deposit would not be described by the term "marketable securities" in subparagraph 130(3)(a)(ii) of the Act, it could nevertheless be contemplated by the broader reference to "securities" in subparagraph 130(3)(a)(vi) and thus relevant for the 10% test therein. This would not affect the status of such a certificate of deposit as "cash" for the purposes of subparagraph 130(3)(a)(ii) of the Act.
The foregoing is an expression of opinion only and is not binding upon the Department with respect to any particular fact situation. We hope, however, this will be of assistance.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate