24 May 1991 External T.I. 9111295 F - Fees Charged to a Trust Governed by an RRSP, RESP or RRIF

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.

5-911129

Dear Sir:

We are writing in reply to your letter of February 11, 1991, referred to us by Revenue Canada, Customs and Excise, and received on April 24, 1991.

You asked whether certain fees charged to a trust governed by a RRSP, RESP or RRIF could be considered expenses and, if paid from a source outside the plan, deductible from income.  You also asked whether the withholding tax should be calculated on the amount received out of a RRSP or RRIF net of the fees and GST or on the gross amount.

Reasonable administration fees paid by an annuitant to the trustee of a RRSP or to the carrier of a RRIF are considered to be deductible expenses in computing income from property. Administration fees are those which relate to services provided by the trustee or carrier to the annuitant.  Note that if the fees are paid from within the plan, no deduction will be permitted.

Deductions for administration fees are not permitted to the subscriber of a RESP since they are not paid, as in the case of a RRSP or RRIF, to produce income from property.

The legal title to investments of a plan or fund are held in the name of the trustee or carrier and not in the name of the annuitant or subscriber.  Fees relating to such investments are therefore expenses of the trust or carrier and are not deductible to the annuitant or subscriber whether paid from within or without the RRSP, RRIF or RESP.  Expenses related to investments include fees for the acquisition or transfer of investments, preparation of title documents, investment counselling, commissions, brokering, or the like, Furthermore, if a RRSP annuitant reimburses the trust for such costs, the amount would be considered a contribution to a RRSP and would be included in calculating the maximum deduction permitted by subsection 146(5) of the Income Tax Act.  Similar reimbursements by a subscriber to a RESP will have the same effect on the proposed maximum annual contribution limit of $1500 (draft legislation announced February 1991).

Tax is withheld on lump sum payments "out of or under the registered retirement savings plan" and on payments "under a registered retirement income fund" (Regulations 103 and 100).  Tax should be calculated on the gross amount.

The views expressed in this letter are not binding on the Department but we hope they are assistance.

Yours truly,

for DirectorFinancial Industries DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch