| 5-921781 | |
| 24(1) | D. Duff |
| (613) 957-8968 |
Attention: 19(1)
June 18, 1992
Dear 19(1)
This is in regard to your letter of June 10, 1992 requesting a ruling on whether warrants for the purchase of Nikkei Index Call options would be a qualified investment for a registered retirement savings plan ("RRSP"). Pursuant to Information Circular 70-6R2 we only issue rulings in accordance with the procedures outlined therein and on specific proposed transactions. However, we do offer the following comments.
Regulation 4900(1)(e) prescribes as a qualified investment for a RRSP, "a warrant or right listed on the Toronto Futures Exchange or a prescribed stock exchange in Canada, giving the owner thereof the right to acquire...any property...that would be a qualified investment for the plan trust". Regulation 3200 lists the prescribed stock exchanges in Canada, and the New York Exchange is not included.
It is the Department's position that index options generally are not qualified investments for RRSPs at a particular time unless it can be clearly established that a qualified investment would be acquired if the options were exercised at that time. Accordingly, if, on the day the option was acquired it could not be converted to a qualified investment, subsection 146(10) of the Income Tax Act would apply to require an income inclusion for the annuitant.
We trust this is satisfactory.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate