Canadian Revenue Agency (“CRA”) regulations place restrictions upon the types of positions that may be held in RSP and TFSA accounts with eligibility limited to those meeting the definition of a “Qualified Investment”. Positions held in such accounts that do not meet this definition are referred to as “Non-Qualified Investments” and are subject to a CRA tax equal to 50% of the fair market value of the property at the time it was acquired or it became Non-Qualified.

Qualified Investments include the following instruments: an investment in properties, including money, guaranteed investment certificates (GICs), government and corporate bonds, mutual funds, and securities listed on a designated stock exchange.  Note that certain investments, while Qualified, may not be offered by IB due to the product type itself or its designated exchange not being supported.¹

Non-Qualified investments include any property that is not is not classified as a Qualified Investment.  Examples include stocks trading on NEX in Canada, as well as on PINK and OTCBB shares in the US.

For additional information, please refer to the CRA website links below:

 http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/glssry-eng.html 

 http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ntvdnc/nnqlfdnvst-eng.html