Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
January 25, 1995
5-943162
J. Teixeira
Memo to file : Management fees.
XXXXXXXXXX wrote in to request a technical interpretation on a factual situation regarding his clients. The situation involved the use of management fees between corporations which are not justified by any service rendered. The sole purpose of the management fees is to reduce the taxable income of one corporation and reduce the losses of another corporation. XXXXXXXXXX was advised of Revenue Canada's position that intercorporate management fees are only deductible if the fees are laid out to earn the income of the corporation and are reasonable. This position of the Department is in the Canadian Tax Foundation Roundtable Questions and Answers of 1991 (Q21) and 1993 (Q42 & 46).
XXXXXXXXXX was referred to ATR 44 and IC 88-2 for a method of utilizing losses within a related group.
XXXXXXXXXX does not require a written reply.
