Effective October 31, 2011, the Minister of Finance (Canada)
approved the addition of the Bermuda Stock Exchange
("BSX") to the list of designated stock
exchanges under the Income Tax Act (Canada) (the
The BSX is only the second foreign stock exchange to be added to
the list of designated stock exchanges since the concept of
designated stock exchange was introduced in Canada's 2007
federal budget ("Budget 2007").
Budget 2007 updated the concept of "prescribed stock
exchange", which was provided for under the Income Tax
Regulations and was used in a variety of contexts under the ITA.
The list of prescribed stock exchanges was replaced with a
three-tiered system of stock exchanges: designated stock exchanges,
recognized stock exchanges and stock exchanges.
A "designated stock exchange" is a stock exchange that
has been designated by the Minister of Finance by public notice,
and includes all existing stock exchanges that were previously
prescribed in the Income Tax Regulations. Additions to the list of
designated stock exchanges no longer require amendments to the
Income Tax Regulations.
The Minister of Finance's process for evaluating whether a
particular stock exchange should be a designated stock exchange
ensures that investors will be confident that their securities are
traded on regulated and transparent markets. Some of the Minister
of Finance's considerations when assessing whether a foreign
stock exchange should qualify as a designated stock exchange
whether the exchange has acceptable standards for new company
listings, including standards that address the number of
shareholders, the dispersion of ownership, and for the maintenance
of a listing;
whether the exchange operates within a regulatory framework
that meets acceptable standards in relation to investor protection,
disclosure requirements, corporate governance, and market
whether the exchange has an experienced management and
governance team, a successful track record of operations, and
sufficient financial resources to ensure long-term viability;
whether the host country of the exchange has commercial, legal
and tax relations with Canada; and
whether the securities regulatory and juridical framework of
the host country of the exchange provides rights and remedies to
Canadian investors which are comparable to those available to
investors in Canada.
Designation status in Canada is particularly important for
Registered Retirement Savings Plan
("RRSP") investors, as securities listed
on designated stock exchanges are eligible to be held in an RRSP.
Securities listed on designated stock exchanges are also eligible
investments for Deferred Profit Sharing Plans and for Tax-Free
Savings Accounts. The addition of the BSX provides Canadian
investors with the opportunity to further diversify their
investment portfolios and maximize the investment returns in their
tax deferred accounts.
The CRA provides new housing rebates for individuals who have purchased or built a new house or have substantially renovated a house or made a major addition to a house who plan on living in it personally or letting a relative live there.
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