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.
Principal Issues:
no relevant research value; taxpayer told to request ruling
Position: N/A
Reasons:N/A
951967
XXXXXXXXXX L.Holloway
(613) 957-8953
Attention: XXXXXXXXXX
November 15, 1995
Dear Sirs/Mesdames:
Re: Reduction to Management Fees for Large Investments in Mutual Funds and Unit Trusts ("mutual funds")
This is in reply to your letter of July 21, 1995, wherein you requested several technical interpretations related to the reduction of management fees for large dollar investments in mutual funds by a non-taxable investor. Your letter outlined circumstances that appear to relate to an actual situation. Confirmation of the tax consequences of proposed transactions in respect of such a situation will only be provided in response to a request for an advance income tax ruling. In the situation described in your letter it would be the mutual fund itself that would request an advance income tax ruling. The procedures for requesting an advance income tax ruling are set out in Information Circular 70-6R2. On the other hand, if your situation relates to completed transactions, you may wish to ask the fund to submit all the relevant facts and documentation to the appropriate Tax Services Office for their comments. However, we offer the following general comments with respect to Income Tax Ruling ATR-65.
Paragraph 4 of ATR-65 states that distributions of net income and net capital gains of a Fund will automatically be reinvested in additional units of such fund unless other arrangements had been made. If this ATR had provided that all distributions would be in the form of cash payments, the ruling given in ATR-65 would remain as stated.
Similarly, if the Funds described in ATR-65 had been managed by several managers as opposed to one manager, but all other facts remained as stated, the ruling given would remain as stated.
In view of your comments concerning the desire of mutual fund investors to obtain more information on tax issues raised by mutual fund managers, we will give serious consideration to the publication of additional ATRs that will address some of these issues.
We trust our comments will be of assistance to you.
Yours truly,
T. Murphy
A/Section Chief
Manufacturing Industries, Partnerships
and Trusts Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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