18 January 1990 Ministerial Letter 58948 F - Technical Interpretation - Set-up Costs - RRP

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.

January 18, 1990

Dear Sirs:

This is in reply to your letter of October 23, 1989 and further to our telephone conversation of January 15, 1990, wherein you requested a technical interpretation as to the treatment of set-up costs with respect to a registered pension plan ("RRP").

It is our view that any reasonable expense incurred by an employer in establishing the RPP would be deductible as a business expense under subsection 9(1) of the Income Tax Act (the "Act").  Reasonable expenses would include, for example, fees paid to register the plan with the relevant provincial Pension Authorities and salaries of employers involved in drafting the plan text of RPP.

You further enquire as to whether an employee covered by an individual RPP could deduct any expenses paid by him in connection with establishing the RPP. You stated that administrative fees paid by an annuitant under a registered retirement savings plan ("RRSP") can be deducted by the annuitant.

As noted in paragraph 2 of Interpretation Bulletin 124R5, reasonable administrative fees paid by an annuitant to the trustee of an RRSP are considered to be deductible expenses in computing income from property, since such administrative fees relate to services provided by the trustee of the RRSP.

In our opinion, an employee is not entitled to deduct expenses paid in connection with establishing an individual RPP since these expenses belong to the employer or the trustee of the RPP.

We trust the above comments will be of assistance to you.

Yours truly,

for DirectorFinancial Industries DivisionRulings Directorate