Revenue Canada Taxation Head Office
R. Nanner (613)957-3494
March 23, 1988
Dear Sirs:
This is in response to your letter of February 15, 1988 wherein you asked the following:
1. Whether dealing in commodity futures contracts by a mutual fund trust would be considered "the investing of funds of the trust" for purposes of paragraph 132(6)(b) of the Income Tax Act (the "Act").
2. Whether commodity futures contracts are considered investments that are "marketable securities" for purposes of paragraph 5000(7)(b) of the Income Tax Regulations (the "Regulations") and whether income earned on the settlement of a futures contract is considered to be "derived from" the futures contract.
We are of the view that a mutual fund trust dealing in commodity futures contracts would be considered to be investing funds of the trust for the purposes of paragraph 132(6)(b) of the Act. Furthermore, a commodity futures contract, in our opinion, would be a "marketable security" for the purposes of paragraph 5000(7)(b) of the Regulations and income earned on the settlement of a futures contract would be considered to be derived from the futures contract.
The above comments are an expression of opinion only and do not bind the Department.
Yours truly,
for Director Financial Industries Division Rulings Directorate