6 August 1989 Income Tax Severed Letter AC74190 - Registered Investments - Eligibility to Act as Trustee

August 6, 1989

Registered Pension and                     Financial Industries
Deferred Income Plans Division             Division
                                           A.B. Adler
Stella Kotlar                              957-8962
Director
                                           7-4190

SUBJECT: Paragraph 204.4(2)(d) of the Income Tax Act (the "Act")
         Your Files  H.A.U 204.4(2)    H.A.U. 8199-9

This is in reply to your memorandum of July 26, 1989 concerning the eligibility 19(1) to act as the trustee in respect of the application for certain funds to become registered investments under paragraph 204.4(2)(d) of the Act.

You indicated that the lawyers 19(1) contend their client is authorized to be the trustee of a mutual fund trust for corporate and trust law purposes under clause 213(3)(b) of the Loan and Trust Corporations Act, 1987 (Ontario) and under OSC Policy Statement No. 11.1, and should be permitted to act as a trustee for a trust under paragraph 204.4(2)(d) of the Act. Further, A.L. Davidson of Legal Services Taxation, verbally agreed with their position.

In his view if 19(1) meets the test for a trustee under paragraph 204.4(2)(a) of the Act then it should probably also qualify as such under paragraph (d) therein. His other reasons are outlined in a summary enclosed with your memorandum.

We concur with the view that where a taxpayer meets the test for a trustee under paragraph 204.4(a) of the Act then the taxpayer should also be accepted as a trustee under paragraph (d) thereunder.

Technically, we do not believe that we should impose a trustee test where the legislation does not require such a test.

for Director Financial Industries Division Rulings Directorate