The following assets are owned by different Canadian taxpayers who hold no other foreign investments at any time during the year. All amounts are in Canadian dollars.

 

For each asset, determine whether the foreign investment reporting rules apply.

Explain your conclusions using Point format

 

1. Shares in a U.S. public company with a cost of $317,000 and a current fair market value of $84,000. One-half of these shares were purchased in the taxpayer’s Canadian brokerage trading account and the other half were purchased in the taxpayer’s self-directed RRSP.

 

2.  A condo in Santa Anna, California, purchased for $425,000. The condo is rented to Canadians for 8 months of the year and used by the taxpayer the remaining 4 months.

 

3. A yacht with a cost of $725,000 which was purchased and is docked in Seattle, Washington. The yacht is used by the Calgary taxpayer for his legendary monthly parties.

 

4. A cottage in Florida, purchased for $100,000 cash down, and assumption of a $400,000 mortgage. The cottage is used by the taxpayer and his extended family throughout the year.

 

5. A warehouse in Texas with a cost of $1,250,000, owned by a Canadian corporation, and used to store its products for distribution.