November 23, 1990
VANCOUVER DISTRICT OFFICE HEAD OFFICE
Financial Industries
Division
Attention: Warren Campbell W.C. Harding
Section 169-12 (613) 957-8953
5-903053SUBJECT: B Corp Instillment Receipts
We recently sent the attached reply to 19(1) in response to his submission of October 9, 1990, a copy of written is also enclosed. His enquiry dealt with an opinion letter issued by your office to 24(1) on October 17, 1989.
With respect to your original reply to 24(1) we note that this was taken from our memo to you of September 22, 1989 which provided you with our opinion as to what the Department's position should be on the eligibility of B Corp Instillment Receipts as investments for RRSPs in a case where an actual completed transaction was being considered.
It is our position that Rulings' opinions, in such cases, should be used in determining the Department's position on assessing the particular case involved, and should not simply be provided to the public at large as a "Rulings Directorate" opinion. Following this procedure will assist in assuring that such cases are not inappropriately referred to Rulings when the taxpayers disagree with the District Office.
With respect to the issues raised by 19(1) it is our opinion that a B Corp Instillment Receipt is a right as described in Regulation 4900(1)(e) notwithstanding that the holder may become obliged to pay an additional amount under the terms of the receipt. We note that the receipt
24(1)
However, that amount payable at that date cannot be predetermined so that, until that time. Obligation to pay is, at best, only a contingent obligation. After 24(1) or at any time the holder exercises a right to acquire a share under the terms of the receipt, it will be a question of fact whether or not a loan arises and whether or not a property of the RRSP has been used as security.
for Director Financial Industries Division Rulings Directorate