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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Whether amounts paid to a beneficiary for performing certain trustee duties are deductible by the trust under 104(6)?
Position: No.
Reasons: Amounts paid for performing duties constitute an expense to the trust, not an allocation of its income. As to whether payment for various types of service provided are deductible, refer to published documents.
XXXXXXXXXX J.D. Brooks
2002-011793
April 3, 2002
Dear XXXXXXXXXX:
Re: Deductibility of Trustee Fees
This is in reply to your letter of December 21, 2001, in which you presented a hypothetical trust situation and requested our views on the deductibility of fees paid by the trust to a beneficiary where the beneficiary performs some trustee acts.
The situation set out in your letter appears to relate to an actual situation. Confirmation of the tax implications of proposed transactions is given only in reply to an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R4. While we are unable to comment on the particular situation described in your letter, the following general comments may be of assistance to you.
If a beneficiary is paid for performing certain duties, such payment would normally be an expense of the trust rather than an allocation of income to the beneficiary. As to the deductibility of fees paid by a trust for duties of a trustee, we refer you to page 19 of the 2001 T3 Guide and page 7 of the 2001 T1 Deceased Guide.
We trust that these comments will be of assistance to you. Please include your telephone number in any future correspondence so we may contact you if we require clarification of your question.
Yours truly,
T. Murphy
Manager
Trusts Section
International and Trusts Division
Income Tax Rulings Directorate
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