28 August 1991 Ruling 911811 F - Exempt Benefit - Financial Counselling for Employees

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                19(1)

We are writing in reply to your letter of June 28, 1991, wherein you requested our opinion as to whether       24(1)             offered by your company would qualify as an exempt benefit under clause 6(1)(a)(iv)(B) of the Income Tax Act (the Act).

Our Comments

Clause 6(1)(a)(iv)(B) of the Act, does not exempt all financial counselling for employees on the theory that an employee's financial position at retirement will likely be enhanced. Rather, we view it as being applicable to a seminar or similar type of presentation for employees who are at or near retirement where the purpose of the presentation is to inform and advise them concerning such topics as:

-      increasing life expectancy, the impact of inflation on financial  resources, post-retirement expectations,

-      the level of income that can be expected at retirement from known  sources,

-      a net worth analysis comparing post-retirement income with expected expenses,

-      tax rules related to investments and retirement savings, and

-      estate planning techniques and concepts.

In one instance, we reviewed the contents of a one day "retirement" seminar, followed by an optional, 90 minute private counselling session focusing on each employee's particular circumstances, and agreed that it would qualify as retirement counselling.

The main difference between retirement counselling and financial counselling is, in our opinion, the frequency with which such services are rendered.  Financial counselling is usually a recurring service with no particular emphasis on retirement. Retirement counselling, on the other hand, is usually a non-recurring service for employees who are clearly at or near retirement (i.e. - within 15 years of the individual's normal retirement date) where the primary emphasis is on retirement issues. Advice relating to the purchase of specific investments or the promotion of a particular investment strategy is not considered to be retirement counselling.

We have reviewed the brochure entitled "Planned Financial Security" and the sample "Report and Planner" which accompanied your letter. In our view the counselling services outlined in these documents would be considered to be financial counselling services and not retirement counselling services as envisioned by clause 6(1)(a)(iv)(B) of the Act.

Our opinion is based on the fact that the financial planning techniques described in your materials would have universal appeal to all levels of employees regardless of their age, years of service, job descriptions, income levels, etc. The retirement aspects of the plan appear to be incidental to the basic financial planning objectives of the "Planned Financial Security" package.

We trust our comments will be of assistance to you.

Yours truly,

for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch