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.
Principal Issues: If an RDSP issuer pays a medical practitioner's fee for the cost of completing the form T2201, will this result in an advantage for purposes of Part XI of the Act?
Position: Yes.
Reasons: Based on the definitions of "benefit" and "advantage" in subsection 205(1) of the Act.
June 5, 2009
Registered Plans Directorate HEADQUARTERS
Actuarial and Policy Division G. Allen
Specialty Products Policy Section 946-3558
Attention: Christina O'Quinn
2009-031987Registered Disability Savings Plan (RDSP) Advantages
This memorandum is in response to your email sent April 29, 2009 wherein you request our views concerning the definition of "advantage" for purposes of RDSPs and the application of the tax in section 206.2 of the Income Tax Act (the "Act"). Specifically, you request our views concerning whether the payment of the fee charged by a qualified medical practitioner to complete form T2201 by an RDSP issuer, or the issuer's agent, on behalf of the RDSP issuer's client, would be considered an advantage for purposes of sections 205 and 206.2 of the Act.
In general, "advantage", in relation to an RDSP, is defined in subsection 205(1) of the Act to mean any benefit or loan that is conditional in any way on the existence of the plan, other than the specific exclusions contained in paragraphs (a) to (f) of the definition. The definition of "benefit" in subsection 205(1), in general, is defined, to include any amount paid or allocated to an RDSP that is represented as a return on investment and that does not reflect open market terms and conditions between parties dealing with each other at arm's length and acting prudently, knowledgeably and willingly. As the definition of "benefit" is not all inclusive, in our view, the payment, of the fee charged by a qualified medical practitioner to complete form T2201, by an RDSP issuer or the issuer's agent, on behalf of the RDSP issuer's client, would be considered a benefit. Clearly, the payment by the RDSP issuer of any fees charged by a qualified medical practitioner for completion of the T2201 would obviously be "in relation to the RDSP" and also a benefit to the RDSP issuer's client, in that it saves the client from having to pay the fees. As this "benefit" is clearly conditional on the existence of the RDSP and is not specifically excluded under paragraphs (a) to (f) of the definition of advantage in subsection 205(1) of the Act, the "benefit" would be considered an advantage. Accordingly, in our view, the tax payable under section 206.2 of the Act would apply.
We trust the above comments will be of assistance.
Mary Pat Baldwin, CA
Manager
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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