U.S. dollars in RRSP

Q - Is it possible to hold U.S. dollars and U.S.-dollar denominated securities inside an RRSP or RESP, or must all contributions to these registered plans be in Canadian dollars? – J.F.

A - All contributions must be in Canadian dollars. You may not hold foreign cash of any kind in a registered plan. However, you can use those Canadian dollars to purchase U.S.-dollar securities once the money is in the plan. These may include stocks traded on American exchanges, U.S.-dollar GICs or bonds, U.S.-dollar units of mutual funds, etc.

Ironically, although you cannot make a cash contribution in U.S. dollars to a plan, you can contribute the types of securities I have mentioned directly as a “contribution-in-kind”.

The bottom line is that only cash is prohibited. Anything else goes. – G.P. (Jan/05)

Posted January 2005

Error regarding foreign currency in RRSP

Q - Your response to a question regarding "U.S. dollars in RRSP" indicates that U.S. cash cannot be held as a qualified investment. I'm having some difficulty reconciling this view with paragraph 14 of IT-320R3. Could you please provide some clarification?

I'm also interested in knowing if a "Certificate of Deposit" issued by a U.S. financial institution is a qualified investment for RRSP purposes?

Thank you very much for your help! - Sheldon

A - I stand corrected. Foreign cash used to be prohibited in an RRSP but that has now been changed. The Canada Revenue Agency Interpretation Bulletin to which you refer states in part as follows: "Money denominated in any currency is a qualified investment except where the money is held for its collectible value, or the fair market value of the money exceeds its stated value as legal tender in its country of issue."

However, the money must be in an account that is covered by the Canada Deposit Insurance Corporation or in a Canadian branch of a foreign bank.

As for Certificates of Deposit (known in the U.S. as CDs) from an American (or any other foreign) bank, they are only RRSP-eligible if they are payable at a Canadian branch of the institution. You'll find that information in paragraph 10 of the same Bulletin. - G.P.

Posted 7/18/2005