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.
DOCUMENT TYPE: Opinion
Principal Issues: Can financial planning fees be paid from an RRSP?
Position: No
Reasons: These are expenses of the annuitant, and will be a benefit taxable under 146(8).
XXXXXXXXXX 2000-002672
M. P. Sarazin
Attention: XXXXXXXXXX
August 23, 2000
Dear XXXXXXXXXX:
Re: Payment from RRSP for Financial Planning
This is in reply to your letter of May 17, 2000, requesting additional comments regarding fees paid by a group registered retirement savings plan ("RRSP") for general financial planning.
In our letter of April 18, 2000 (file 2000-001376),we advised you that financial/retirement planning services (which may include tax planning, estate planning, insurance, education financing, retirement planning, investment strategy, debt management, etc.) are expenses of the employee, not the RRSP trust. Accordingly, financial/retirement planning services paid by the RRSP trust at the direction of, or with the concurrence of the annuitant would constitute a benefit to the annuitant from the RRSP which is included in income of the annuitant under subsections 146(8) and 56(2) of the Act. We also warned that subsection 146(12) may apply where an amount has been paid from an RRSP trust to a service provider for financial/retirement planning services and subsections 146(8) and 56(2) do not apply.
Before commenting further please note that we have reconsidered the views expressed in our letter of April 18, 2000, and now consider that the sole operative provision in the situation discussed above is subsection 146(8) of the Act and that it is not necessary to apply subsection 56(2) of the Act.
Since group RRSP participant education programs are a normal and strongly-entrenched practice among group RRSP sponsors, you would like our confirmation that the payment for such services with group RRSP funds will not prejudice the registered status of the group RRSP.
We confirm that the comments provided in our letter of April 18, 2000 (subject to the change noted above) will apply in respect of the fees provided for the various types of services being provided to group RRSP participants. Whether fees associated with general plan information, retirement education or investment education would constitute administration or investment counsel fees is a question of fact that can only be determined after a review of all of the related facts.
The Registered Plans Division is responsible for determining whether subsection 146(12) of the Act would be applied in any particular circumstances. In your previous discussions with the Registered Plans Division, they explained how they determined whether certain payments will be considered off-side for purposes of subsection 146(12) of the Act. We have taken the liberty of forwarding a copy of your letter and our response to Mr. Phil Kohnen of the Registered Plans Division for his consideration.
We trust that the above will be of assistance.
Yours truly,
P. Spice
for Director
Financial Industries Division
Income Tax Rulings Directorate
cc: Phil Kohnen
Registered Plans Division
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