MEMORANDUM
October 13, 1988
TO Calgary District Office Enquiries & Office Examination 2nd Floor, Room 250
FROM Head Office Financial Industries Division Wayne C. Harding (613) 957-3499
Attention Barry Arnason Section Chief
This is in reply to your Section's recent enquiry to Head Office, Enquiries and Taxpayer Assistance Division, concerning the tax implications to RRSP's of the XXXX, as described in the documentation provided (copy attached). Your enquiry was referred to us for reply.
In general, the tax implications in respect of an RRSP which acquires XXXX are as described in paragraph 5 of the documentation. That is, the RRSP will be subject to taxation under Part XI of the Income Tax Act (the "Act") (calculated in accordance with Area A of schedule 1 of the TR3-IND) should it acquire and hold at the end of any month XXXX (or any other non-excluded foreign property which is a qualified property) the "cost amount" of which exceeds, in total, 10% of the "cost amounts" of all of the property held by the RRSP. The tax is 1% of the lesser of the excess and the cost amount of all of its foreign property acquired since June 18, 1971. Any tax owing would be payable on the filing of a T3 for the year and would continue to accrue monthly so long as the plan retained any excess foreign property.
for Director Financial Industries Division Rulings Directorate