| 5-913141 | |
| D. S. Delorey | |
| 24(1) | (613) 957-8953 |
Attention: 19(1)
February 3, 1992
Dear Sirs:
This is in reply to your letter of November 8, 1991 concerning qualified investments for a trust governed by a registered retirement savings plan ("RRSP Trust").
More particularly, you mention that your club is considering offering mortgage bonds to the members and you ask if the mortgage bonds would represent qualified investments for an RRSP Trust. Confirmation of the income tax implications inherent in a specific proposed transaction is given by this Directorate only where the transaction is the subject matter of an advance ruling request submitted in the manner set out in the enclosed Information Circular 70-6R2. We offer however the following general comments.
By virtue of subsection 4900(4) of the Income Tax Regulations, an interest in a mortgage secured by real property situated in Canada is a qualified investment for an RRSP Trust where the mortgagor deals at arm's length with the RRSP annuitant. It is not necessary that the mortgage be a first mortgage; i.e., an interest in a second mortgage could qualify. Also, various types of security could evidence the ownership of such an interest; e.g., a mortgage bond could evidence such ownership.
The above comments are an expression of opinion only and are not binding on the Department as explained in paragraph 21 of the enclosed IC70-6R2. We trust however that they are of assistance.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate