Income Tax Regulations (C.R.C., c. 945)

Regulations are current to 2014-04-02 and last amended on 2013-12-12. Previous Versions

Designated Laws

 For the purposes of paragraph 8302(3)(m), subparagraph 8502(c)(iii) and paragraph 8517(5)(f), “designated provision of the law of Canada or a province” means subsection 21(2) of the Pension Benefits Standards Act, 1985 and any provision of a law of a province that is similar to that subsection.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/92-51, s. 7.

Prohibited Investments

  •  (1) For the purposes of subparagraph 8502(h)(i) and subject to subsections (2), (2.1) and (3), a prohibited investment in respect of a registered pension plan is a share of the capital stock of, an interest in, or a debt of

    • (a) an employer who participates in the plan,

    • (b) a person who is connected with an employer who participates in the plan,

    • (c) a member of the plan,

    • (d) a person or partnership that controls, directly or indirectly, in any manner whatever, a person or partnership referred to in paragraph (a) or (b), or

    • (e) a person or partnership that does not deal at arm’s length with a person or partnership referred to in paragraph (a), (b), (c) or (d),

    or an interest in, or a right to acquire, such a share, interest or debt.

  • (2) A prohibited investment does not include

    • (a) a debt obligation described in paragraph (a) of the definition “fully exempt interest” in subsection 212(3) of the Act;

    • (b) a share listed on a designated stock exchange;

    • (c) a bond, debenture, note or similar obligation of a corporation any shares of which are listed on a designated stock exchange;

    • (d) an interest in, or a right to acquire, property referred to in paragraph (b) or (c); or

    • (e) a mortgage in respect of real property situated in Canada that

      • (i) where this condition has not been waived by the Minister and the amount paid for the mortgage, together with the amount of any indebtedness outstanding at the time the mortgage was acquired under any mortgage or hypothec that ranks equally with or superior to the mortgage, exceeds 75 per cent of the fair market value, at that time, of the real property that is subject to the mortgage, is insured under the National Housing Act or by a corporation that offers its services to the public in Canada as an insurer of mortgages,

      • (ii) where the registered pension plan in connection with which the mortgage is held would be a designated plan for the purposes of subsection 8515(5) if subsection 8515(4) were read without reference to paragraph (b) thereof, is administered by an approved lender under the National Housing Act, and

      • (iii) bears a rate of interest that would be reasonable in the circumstances if the mortgagor dealt with the mortgagee at arm’s length.

  • (2.1) Where a share of the capital stock of, an interest in or a debt of, a person who is connected with a particular employer who participates in a registered pension plan that is a multi-employer plan would, but for this subsection, be a prohibited investment in respect of the plan, the property is not a prohibited investment in respect of the plan if

    • (a) the plan contains no money purchase provision other than a money purchase provision under which each member account is credited, on a reasonable basis and no less frequently than annually, an amount based on the income earned, losses incurred and capital gains and capital losses realized, on all of the property held by the plan;

    • (b) at the time the property is acquired by the plan, there are at least 15 employers who participate in the plan and, for this purpose,

      • (i) all employers who are related to each other are deemed to be a single employer, and

      • (ii) all the structural units of a trade union, including each local, branch, national and international unit, are deemed to be a single employer;

    • (c) at the time the property is acquired by the plan, no more than 10% of the active members of the plan are employed by the particular employer or by any person related to the particular employer;

    • (d) the property would not be a prohibited investment in respect of the plan if subsection (1) were read without reference to paragraph (1)(b); and

    • (e) immediately after the time the property is acquired by the plan, the total of all amounts each of which is the cost amount to a person of a property held in connection with the plan that would, but for this subsection, be a prohibited investment in respect of the plan does not exceed 10% of the total of all amounts each of which is the cost amount to a person of a property held in connection with the plan.

  • (2.2) For the purposes of the conditions set out in paragraphs (2.1)(b) and (c), two corporations that are related to each other solely because they are both controlled by Her Majesty in right of Canada or a province are deemed not to be related to each other.

  • (3) A prohibited investment in respect of a registered pension plan does not include an investment that was acquired by the plan before March 28, 1988.

  • (4) For the purposes of subsection (3), where at any time after March 27, 1988, the principal amount of a bond, debenture, note, mortgage or similar obligation increases as a consequence of the advancement or lending of additional amounts, or the maturity date of such an obligation is extended, the obligation shall, after that time, be deemed to have been issued at that time.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/92-51, s. 7;
  • SOR/94-686, ss. 62, 78(F), 79(F);
  • SOR/2001-67, s. 9;
  • 2007, c. 35, s. 86;
  • 2013, c. 34, s. 410.