Revenue Canada Taxation Head Office
T.D. Peters (613) 995-0051
July 8, 1986
Dear Sirs:
This is in reply to your letter of May 26, 1986 requesting our views as to the treatment of certain investments made by pension funds and registered retirement savings plans.
As stated in paragraph 5000(1)(a) to (e) of the Income Tax Regulations (the "Regulations") where a taxpayer holds an interest in a mutual fund trust, it will not be a foreign property for purposes of computing the tax payable by the taxpayer under Part XI of the Income Tax Act (the "Act") in respect of any particular month if the mutual fund trust has not acquired any foreign property after June 30, 1971 or at no time during the relevant period for the particular month did the cost to the trust of all foreign property held by it exceed 10% of the cost to it of all property held by it.
In consequence, we agree that where a pension plan or a registered retirement savings plan invest 90% of its assets in a mutual fund trust, which would not be considered foreign property pursuant to the provisions of the Regulations described above, it may invest the full 10% of its remaining assets exclusively in foreign property without attracting tax under Part XI of the Act.
We trust these comments will be of assistance to you in this matter.
Yours truly,
for Director
Financial Industries Division Rulings Directorate Legislative and Intergovernmental Affairs Branch