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.
SURREY TAXATION CENTRE HEAD OFFICE Financial Industries Division G. MartineauTaxpayer Services
Attention: Pam Lyons
Committeeship Fees XXXXXXXXXX
This is in reply to your memorandum dated May 11, 1993 concerning the deductibility of committeeship fees for the taxpayer mentioned above.
Pursuant to the Patients Property Act of British Columbia, a court may appoint any person to be the committee of a patient to manage his affairs on his behalf due to mental infirmity.
An expense is only deductible by a taxpayer pursuant to the Income Tax Act (the "Act") if it is (a) an expense of the taxpayer, (b) made or incurred for the purposes of earning income from a business or property of the taxpayer, (c) reasonable in the circumstances and (d) not an outlay of a capital nature . An expenditure relating to the purchase or disposition of investments would be included in the adjusted cost base or the cost of disposition to the extent the expenditure was made or incurred for the purpose of making the purchase or disposition as the case may be.
Paragraph 20(1)(bb) of the Act allows a taxpayer to deduct fees which are capital in nature, other than commissions, paid for advice on buying or selling a specific share or security of the taxpayer or for the administration or the management of the shares or securities of the taxpayer. IT-238R2 provides additional information on this issue.
IT-99R3 mentions that fees and expenses incurred for advice and assistance in preparing and filing of returns for income tax purposes are deductible in computing income from a business or property where the nature of the taxpayer's business or property is such that it is a normal part of operations of that kind to obtain legal and accounting services.
The facts submitted by the taxpayer are not sufficient to conclude that the committeeship fees are fully deductible. In his letter dated February 8, 1993, the representative mentioned that the committeeship fees on the taxpayer's estate are health related. The definition of medical expense pursuant to subsection 118.2(2) of the Act does not include the committeeship fees. Furthermore, the Act does not permit the deductibility of committeeship fees relating to personal expenses.
However, in his letter dated October 22, 1992, he stated that his activities for the committeeship included health care matters, living accommodation, contract negotiations, investment portfolio review, daughter's education, health care matters, accounting, etc. The representative might provide the share of his fees related to the investments of the taxpayer in order to determine the deductibility of such fees in light of our comments above.
We trust our comments will be of assistance to you.
Section Chief Financing, Leasing and Income Plans Section Financial Industries DivisionRulings Directorate
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