Accessing RSPs

It’s a little-known secret in the business community that the Income Tax Act generally allows for shares in Canadian controlled private companies to be held inside a registered plan (RSP/TFSA/RRIF/etc.).

One requirement for private company shares to qualify as an investment for registered plans is that the company has to be engaged in an“active business,” that’s carried out primarily in Canada. The good news is that most businesses, be they a brewery, manufacturer, restaurant, retailer, etc. will meet the active business test.

Now there’s one problem. The money you are looking to get from investors is often going to be held in existing RRSPs.

If you manage to get 20 RSP investors, the funds designated for your company may currently be held at 10 different banks/financial institutions across Canada. Most of these institutions don’t like private securities and will have significant costs/barriers to entry for the business owner to have their shares held in their accounts.  Others will outright refuse to deal with private company securities.

Business are typically much better off to choose one financial institution to deal with and have all investors who want to make the investment open a new self-directed account there for the sole purpose of investing in your preferred shares.  Only a few companies in Canada accept private company shares into RSPs without an abundance of red tape for the business owner.

Olympia Trust Company is the leader in Canada for administering registered plans where the primary investment is a private security. For more information visit