G. Kauppinen (613)957-3495
March 4, 1987
Dear Sirs:
RE: XXXX Our File 3-0662
This is in reply to your letter dated January 21, 1987 regarding mutual fund trusts.
A unit trust resident in Canada whose only undertaking is the investing of funds of the trust will be a qualified investment for a Registered Retirement Savings Plan ("RRSP") pursuant to paragraph 4900(1)(d) of the Income Tax Regulations ("Regulations") at a time that the prescribed conditions contained in section 4801 of the Regulations are satisfied. No affidavit is required to be filed to confirm that section 4801 of the Regulations has been complied with. However, adequate records should be maintained so that compliance of these Regulations can be verified if questioned during any audit by a District Taxation Officer.
As discussed,. the election pursuant to subsection 132(6) of the Income Tax Act ("Act") is made in the form of a written statement filed with the first income tax return of the trust. However, for greater clarity we wish to point out that while the election will deem the trust to have been a mutual fund trust from the commencement of the year until the day it became a mutual fund trust for the purposes of section 132 of the Act, any units of the trust acquired by an RRSP prior to the day the trust actually became a mutual fund trust will be non-qualified investments for the RRSP until the day the trust actually becomes a mutual fund trust.
Alternatively, if a mutual fund trust at any time ceases to satisfy the conditions in subsection 132(6) of the Act, (including of course, the dispersion requirements contained in section 4801 of the Regulations), it will at that time cease to be a mutual fund trust and units thereof will become non-qualified investments for an RRSP.
We are also in receipt of your letter dated February 12, 1987 regarding our invoices for fees for advance tax rulings. We wish to advise that these are separate invoices. One is for XXXX. The other should read XXXX rather than XXXXXXXX. We apologize for any inconvenience this may have caused.
We trust the foregoing is of assistance.
Yours truly,
for Director Financial Industries Division Rulings Directorate Legislative and Intergovernmental Affairs Branch