1 September 1992 External T.I. 9222645 F - American Depositary Receipts For RRSP

By services, 7 July, 2022
Official title
American Depositary Receipts For RRSP
Language
French
CRA tags
104, 204 qualified investment
Document number
Citation name
9222645
Severed letter type
Technical Interpretation - External
d7 import status
Drupal 7 entity type
Node
Drupal 7 entity ID
650309
Extra import data
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"field_release_date_new": "1992-09-01 08:00:00",
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Main text
                                      5-922264
                                      P. Spice
  (613) 957-8953

24(1)

Attention:  19(1)

September 1, 1992

Dear Sirs:

Re: American Depositary Receipts ("ADR's") As Qualified Investments for Registered Retirement Savings Plans (RRSP's)

This is in reply to your letter of July 21, 1992, in which you ask us to confirm our policy to treat ownership of ADR's traded on the New York stock exchange as ownership of the corresponding underlying shares "through a bare trustee arrangement".

It is our understanding that an ADR is a certificate of a depositary (bank, trust company, etc.) certifying that it holds for the account of the named person the number and class of shares specified in the ADR, and that such person is entitled on presentation of the ADR to take delivery of the shares.

It is therefore our view, based on the above understanding, that an ADR would represent a qualified investment for an RRSP trust where the underlying share is listed on a stock exchange prescribed in section 3201 of the Income Tax Act Regulations, and the agreement between the RRSP trust and the depositary does not constitute a trust.

You make reference to a "bare trustee arrangement" in your letter.  We understand that a "bare trust" means a trust under common law where the trustee has no significant powers or responsibilities, and can take no action regarding the property held by the trust without instructions from the settlor.  Furthermore, the settlor can cause the property to revert to him at any time.

If a person owns shares and then transfers them to a "bare trustee", the Department would treat the settlor, and not the bare trustee as the owner of the shares for purposes of the Income Tax Act.  This is a treatment distinct from the one mentioned earlier in our discussion of an ADR, however.

The above comments are an expression of opinion only and are not binding on the Department, as explained in paragraph 24 of Information Circular 70-6R2.  We trust, however, that they are of assistance.

Yours truly,

for DirectorFinancial Industries DivisionRulings Directorate