Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
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 26, 2000
XXXXXXXXXX
Dear XXXXXXXXXX:
Thank you for your letter of August 31, 1999, concerning the taxation of mutual fund sales commissions.
You attached an article from the June, 1999 Investment Executive, a publication that deals with the taxation of mutual fund sales commissions. The article mentions an income tax ruling of November 5, 1998, concerning the correct tax reporting obligations with respect to commissions earned by independently contracted agents from the sale of mutual funds. On the basis of the letter and the article, you are concerned that the Canada Customs and Revenue Agency may be preparing to tax, at a personal rather than a corporate taxation rate, mutual fund sales commissions earned by companies in which the investment advisor is the primary shareholder of the corporation.
Whether a corporation or an individual is taxed on mutual fund sales commission requires an examination of the facts to determine which person carried on the business that generated the commission income. Certain jurisdictions require the registration of persons entitled to sell mutual funds. Where the legislation of such a jurisdiction precludes a corporation from being registered as a salesperson, the assignment of commissions earned by a registered individual salesperson to that individual's corporation will not preclude the individual from being taxed on the commissions earned.
I trust that these comments are of assistance.
Yours sincerely,
Martin Cauchon,
C.C. Minister's Office
Political Assistant
Jacques Grisé
957-2059
October 15, 1999
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