2014-0519461M4 ETF a qualified investment if traded on BATS?

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.

Principal Issues: Is the BATS a designated stock exchange and is an ETF traded on BATS a qualified investment for the purposes of an RRSP or TFSA?

Position: No.

Reasons: BATS is not listed on the Department of Finance's list of Designated Stock Exchanges

Author: Storr, Keely

Section: Sections 204 "qualified investments" and 262; subsections 248(1) "designated stock exchange"

April 4, 2014



The office of the former Minister of Finance, the Honourable James M. Flaherty, sent me a copy of your correspondence about securities listed on a stock exchange and their eligibility to be held in a registered retirement savings plan (RRSP) or a tax-free savings account (TFSA) under the Income Tax Act. I apologize for the delay in replying.

Specifically, you are asking if an exchange traded fund (ETF) listed on the Better Alternative Trading System (BATS) is a qualified investment for an RRSP or a TFSA under the legislation for these types of registered plans.

RRSPs and TFSAs must limit their investments to qualified investments. The Act provides the investment categories that are acceptable as qualified investments. In general, securities (other than futures contracts or other derivative instruments for which the holder’s risk of loss may exceed the holder’s cost) that are listed on a designated stock exchange are qualified investments for RRSPs and TFSAs. The BATS is not included on the list of designated stock exchanges.

Designated stock exchanges are designated as such by the Minister of Finance and are listed on the Department of Finance Canada website at www.fin.gc.ca/act/fim-imf/dse-bvd-eng.asp. Officials of the Canada Revenue Agency consider the designation of a stock exchange to be a question of fact rather than a matter of interpretation of the legislation.

You can find the purpose of designating a stock exchange in a 2008 archived newsletter available on the Finance Canada website at www.fin.gc.ca/n08/data/08-049_1-eng.asp.

I trust the information I have provided is helpful.

Yours sincerely,


Kerry-Lynne D. Findlay, P.C., Q.C., M.P.
Minister of National Revenue


Keely Storr|

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