Revenue Canada Taxation Head Office
R. Nanner (613) 957-8960
December 30, 1986
Dear Sirs:
Re: Qualified investments for registered retirement saving plans ("RRSP's")
This is in reply to your letters dated July 31, October 27 and December 5, 1986 wherein you asked whether the "eurobonds" (described in the brochure submitted by you), which are issued by corporations whose shares are listed on a prescribed stock exchange in Canada, or corporations which are wholly-owned by the government of a province or the federal government, would be a "qualified investment" in accordance with paragraph 146(1)(g) of the Income Tax Act (the "Act").
Upon reviewing the brochure submitted by you, there are some concerns that the investment described therein is not an investment in eurobonds. There appears to be a trust relationship between XXXX and the investor.
Furthermore, this relationship does not appear to be a relationship of a bare trustee and a beneficial owner because the trustee is providing services to the beneficiaries, e.g. collection of redemption proceeds and coupon receipts and payment thereof to the investor. In addition, an investor does not own a particular unit of a bond issue. If the investment described in the brochure is an interest in a non-resident trust, it is not a "qualified investment" pursuant to paragraph 146(l)(g) of the Act and it is foreign property as that term is defined in subsection 206(1) of the Act.
If you wish to o so you can make submissions as to why, in your view, the XXXX should not be considered a trust and we will forward them to our legal advisors for their review. Since the final determination of facts in this case could presumably be of importance to your clients we want to afford you this opportunity to make representations on the matter.
Finally, as we mentioned to you previously, if this is not a trust, since the "cash amount" is not denominated in Canadian dollars, it will not constitute a "qualified investment" pursuant to paragraph 14(1)(g) of the Act and would be foreign property pursuant to subsection 206(1) of the Act.
Yours truly,
for Director Financial Industries Division Rulings Directorate Legislative and Intergovernmental Affairs Branch