QUESTION I-76
Offshore Investment Funds
Paragraph 94.1(1)(b) refers to property that may reasonably be considered to derive its value, directly or indirectly, primarily from "portfolio investments". Does the term "portfolio investments" refer only to passive investments?
DEPARTMENT'S POSITION
Revenue Canada is of the opinion that the meaning of the term "portfolio investments" is not confined to interests in non-resident entities which derive their value directly or indirectly from passive investments or from those investments defined as portfolio investments in the CICA handbook. The term "portfolio investments" must be given a meaning that is sufficiently broad to encompass the types of different properties listed in that paragraph. Since some of the properties listed in paragraph 94.1(1)(b) of the Act may only be used in a business, as defined in subsection 248(1) of the Act, it is the opinion of Revenue Canada that "portfolio investments" will include any of the listed properties used by a non-resident entity in carrying on a business.
Prepared by: O. Laurikainen