17 February 1995 External T.I. 9427435 - FINANCIAL PLANNING SEMINAR COSTS

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

		942743
XXXXXXXXXX	A.M. Brake

Attention: XXXXXXXXXX

February 17, 1995

Dear Sirs:

Re: Investment Counselling/Financial Planning Seminar Costs

This is in reply to your letter of October 18, 1994, wherein you posed questions relating to the deductibility of costs relating to a

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Although you have asked for a technical interpretation, the situation presented appears to be an actual fact situation. Should this situation involve a proposed transaction, you may wish to submit all relevant facts and proposed transactions for a binding advance income tax ruling. However, should this situation involve actual taxpayers and completed transactions you may wish to submit all relevant facts and documentation (including company names and identification numbers) to the appropriate District Taxation Office for their comments. We are, however, prepared to provide some general comments.

Our Comments

Paragraph 20(1)(bb) provides a deduction in respect of an amount paid to a person who's principal business is advising others as to the advisability of purchasing or selling specific shares or securities, or who's principal business includes the provision of services in respect of administration or management of shares or securities. Also, the amount must be paid by the taxpayer for advice as to the advisability of purchasing or selling a specific share or security of the taxpayer, or for services in respect of the administration or management of shares or securities of the taxpayer.

In the absence of the restrictive deduction provided by paragraph 20(1)(bb), the cost incurred by a person in becoming knowledgable in such matters would, in our view, constitute a capital outlay to the person acquiring such knowledge and information. The Act also provides a non-refundable credit in respect of tuition fees, however, in our view, the amounts in question would neither qualify as tuition fees or as amounts specifically provided for under paragraph 20(1)(bb).

In order to qualify under subsection 9(1) as a deduction in computing income, it must also meet the test set out in paragraph 18(1)(a) of the Act as being an outlay or expense laid out to earn income and must also be subject to section 67 of the Act as being reasonable under the circumstances. Generally speaking, in an accounting sense, an expense is matched against the revenue which it produces. This, in our view, would not be the case with the amounts in question as they are considered to be outlays of a capital nature and fall within the ambit of paragraph 18(1)(b).

We trust our comments will be of assistance to you.

Yours truly,

R. Albert
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch