| 19(1) | File No. 5-9379 |
| A.B. Adler | |
| (613) 957-8962 |
February 8, 1990
Dear Sirs:
This is in reply to your letter dated December 20, 1989 in which you requested clarification with respect to investment restrictions affecting retirement compensation arrangements ("RCA") under the Income Tax Act ("Act").
We confirm that neither the RCA rules in the Act nor the Income Tax Regulations restrict the type of investments that may be held by an RCA trust. However as you are aware, an election under subsection 207.5(2) of the Act may only be made where the subject property of the trust, if any, consists only of cash, debt obligations, shares listed on a prescribed stock exchange, or any combination thereof. In our view where the subject property of an RCA trust includes units in a mutual fund trust, a unit trust, or a registered investment, the requirements of subsection 207.5(2) of the Act will not be met regardless of the type of property held by the unit trust, mutual fund trust, or registered investment.
We trust that our comments will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate