Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
RRSP holding interest in a mortgage.
Position TAKEN:
Routine reply
Reasons FOR POSITION:
Routine
XXXXXXXXXX 5-942945
Attention: XXXXXXXXXX
December 2, 1994
Dear Sirs:
Re: Qualified Investments for Registered Retirement Savings Plans
This is in reply to your facsimile transmission of November 16, 1994 with respect to the holding of mortgages as qualified Investment for a registered retirement savings plan ("RRSP").
A qualified investment for a trust governed by an RRSP must be owned by the trustee of the RRSP under the terms of the trust and, since ownership of securities is normally demonstrated by their registration, the Department is of the view that investments of an RRSP trust should be registered in the name of the trustee and not, for example, in the name of the RRSP annuitant. This view is set out in paragraph 1 of Interpretation Bulletin IT-320R, paragraph 15 of Information Circular 72-22R8 and on page 22 of the 1994 Pension and RRSP Tax Guide under the caption "Self-directed RRSPs".
In some cases an agency agreement may be entered into between a trustee and another party such as a securities dealer, if it is necessary to register investments of the trust in the agent's name. If so, the form of the registration should clearly disclose the fact of agency, the identity of the trustee and the registration number of the RRSP that governs the trust. However, caution must be exercised when a trust will act in an agency capacity. If the mortgage is owned by the trust and the trustee of the RRSP holds an interest in the trust rather then an interest in the mortgage, the investment will not normally be a qualified investment because an interest in a trust is not a qualified investment for a trust governed by an RRSP except in limited circumstances such as when it is a registered investment as provided in Part X.2 of the Act or it is a mutual fund. Mortgage bonds issued by the debtor and administered by a trust holding a mortgage deed can often be used in these situations.
The above comments are based on our understanding of the law as it applies in general and may or may not apply to the circumstances of a particular case. They do not form an advance income tax ruling and they are not binding on the Department.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
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