18 December 1989 Administrative Letter 58836 F - Deductibility of Personal Financial Planning Services

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.

Dear Sirs:

This is in reply to your letter of October 4, 1989 concerning the deductibility if the cost of personal financial planning services.

In your letter,

24(1)

With respect of the information you have provided, paragraph 1 of Interpretation Bulletin IT-238R2, a copy of which is enclosed, indicates that fees paid for advice on buying or selling a specific share or security by a taxpayer or for the administration or the management of the shares or securities of the taxpayer are allowable deductions under paragraph 20(1)(bb) of the Income Tax Act;  but the fees must be paid to a person whose principal business is advising others whether to but specific shares or whose principal business includes the administration or management of shares or securities.  In addition, paragraph 3 of IT-238R2 indicates that fees paid for other types of advice such as general financial counselling or planning are not within the provisions of paragraph 20(1)(bb).  It is also our general view that such fees are not deductible under any other provision of the Income Tax Act as they are on account of capital.

From the information available 24(1)

As a final comment, we note that paragraph 5 of IT-238R2 indicates that fees may be an allowable deduction under subsection 9(1) where they were incurred for purpose of gaining or producing income from business or property.  It is not possible to determine if any part of a fee is deductible pursuant to those comments without a review of a customer's particular fact situation.

We hope the foregoing comments will be of assistance to you.

Yours truly,

for DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch