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:
Limitation on foreign content held by RRSPs on a trust by trust basis.
Position:
Stated that existing law does not allow the combination of plans to determine foreign content limit.
XXXXXXXXXX
Reasons:
No basis in existing law to provide any relief.
XXXXXXXXXX 1999-001428
W. C. Harding
January 26, 2000
Dear XXXXXXXXXX:
Re: Foreign Property held in Registered Retirement Savings Plans (RRSPs)
This is in reply to your letter of December 5, 1999, in which you requested relief from the application of Part XI of the Income Tax Act (the "Act") on the excess foreign property held in one of your RRSPs, even though the aggregate foreign property held by all of your RRSPs would be within the limit allowed under the Act if they were combined.
Each trust governed by an RRSP is subject to Part XI tax on excess foreign property pursuant to paragraph 205(b) of the Act. In general terms, subsection 206(2) of the Act provides that where at the end of any month after 1993 the total of the cost amount of foreign property to a particular RRSP trust exceeds 20% of the cost amount of all property held at that time, the RRSP trust is subject to a tax of 1% of the lesser of the excess and the total of the cost amounts of all foreign property. Consequently, it is the property in each individual RRSP trust which is subject to the limits imposed by subsection 206(2) of the Act and not the aggregate property held in all of the RRSP trusts of the one annuitant. Accordingly the Canada Customs & Revenue Agency has no means to provide the relief you have requested.
With respect to your concerns on the appropriateness and fairness of these provisions, because amendments to the legislation is the responsibility of the Department of Finance, you may wish to send your comments to the Honourable Paul Martin, Minister of Finance, for his consideration when reviewing legislation relating to this issue.
We trust our comments will be of assistance.
Yours truly,
P. Spice
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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