2016-0676961E5 T5008

Principal Issues: Whether T5008 needs to be filed for transactions in units with constant fixed price in foreign currency

Position: Yes

Reasons: Administrative position applies only to units denominated in Canadian currency

Author: Friedlander, Lara G.
Section: Section 230 of the Income Tax Regulations

XXXXXXXXXX                                                                                                                        2016-067696
                                                                                                                                                Lara Friedlander
February 21, 2017

Dear XXXXXXXXXX:

Re:  T5008 Reporting

This is in response to your letter of November 22, 2016 concerning the requirement to file a Form T5008 in certain circumstances.

Section 230 of the Income Tax Regulations (the “Regulations”) provides for the filing of an information return, Form T5008, in respect of certain securities transfers.  Subsection 230(2) of the Regulations provides that every trader or dealer in securities who, in a calendar year, purchases a security as principal or sells a security as agent for any vendor is required to make an information return in respect of the purchase or sale.  Subsection 230(3) of the Regulations provides that every person (other than an individual who is not a trust) who in a calendar year redeems, acquires or cancels in any manner whatever (other than in connection with certain transactions) any securities issued by that person is to make an information return.  “Security” is defined in subsection 230(1) of the Regulations and includes a “publicly traded interest in a trust”.  “Publicly traded” security is defined in subsection 230(1) of the Regulations as being a security that is listed or posted for trading on a stock exchange, commodity exchange, futures exchange or any other exchange or a security in respect of the sale or distribution of which a prospectus, registration statement or similar document has been filed with a public authority.

Page 7 of the Handbook on Securities Transactions (Publication RC4268) (the “Handbook”) states the following:

      The purchase (for your own account), sale, redemption, acquisition, or cancellation of units or shares of publicly traded pooled funds, mutual funds and mutual fund corporations qualify as publicly traded securities and have to be reported on a T5008 information return.

      Units in a trust that trade at a constant fixed price, such as money market funds, are excluded from this T5008 filing requirement.  The income earned from money market funds should be reported on T3 or T5 slips as appropriate.

You have asked whether this position applies to units of U.S. dollar denominated money market funds, and whether the response would be different depending on whether the units were held in a Canadian dollar account or a U.S. dollar account.

Our Comments

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R6, Advance Income Tax Rulings, dated August 29, 2014.  Also, where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. Nonetheless, we have provided some general comments below.

The position in the Handbook set out above does not apply to units in a U.S. dollar denominated money market fund, regardless of whether the units are held in a Canadian dollar account or a U.S. dollar account.  The phrase “constant fixed price” in the Handbook reflects a constant fixed price measured in Canadian dollars.

We trust that these comments will be of assistance.

Yours truly,

G. Moore
For Director
Partnerships and Corporate Financing Section
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

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