Path: utzoo!utgpu!watmath!ubc-cs!alberta!idacom!ianmoss
From: ianmoss@idacom.UUCP (Ian Moss)
Newsgroups: can.general
Subject: Re: income tax tips #22: interest accrual
Summary: Question to David Sherman re Shares in pri. co. and RRSP
Message-ID: <672@idacom.UUCP>
Date: 25 May 89 16:56:10 GMT
References: <1989May22.195737.16996@lsuc.uucp> <1989May23.005347.23006@lsuc.uucp>
Distribution: can
Organization: IDACOM Electronics Ltd., Edmonton, Alta.
Lines: 25


A recent article in the Financial Post by Bob Saunders of Vancouver 
suggested it is possible to hold shares in a private company in a 
self-directed RRSP.  A little research led to an article in the 
July-August 1988 edition of the Canadian Tax Reporter (vol 36, No.4
pg. 992 ).  To my layman's view, it appears that myself and other employees
in our company should be able to take advantage of this type of tax 
break using shares we have bought and/or recieved from a profit sharing
plan.  I have a couple of questions however that perhaps you could help
me with.

   1.  What constitutes "dealing at arm's length"?  Do employees
holding small amounts of voting shares in a private company qualify
as "at arm's length"?

   2.  How do we determine with reasonable confidence that our shares 
qualify for inclusion in a self-directed RRSP?  I assume that the plan
administrator would require some form of "authorization" before issuing 
the necessary documentation for filing with a tax return.

Additional references - Section 146, regulations 4900 and 5100
     Income Tax Act RSC 1952 c148 as amended by sc1970-71-72 c63
     and as subsequently amended.