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:
Can admin fees charged by the trustee of an RRSP trust put the trust in an overdraft position?
Position:
If terms of plan allow for trustee to collect from the rrsp trust then yes.
Reasons:
We have stated in many letters and in the RRSP guide that we will accept that the trust can pay the trustee expense but the overdraft may cause 146(4) or 146(10) to apply.
953119
XXXXXXXXXX M.P. Sarazin
Attention: XXXXXXXXXX
February 14, 1996
Dear Sirs:
Re: Retirement Plan Trust Administrative Expenses
This is in reply to your letter dated November 23, 1995, wherein you requested our comments as to whether the trustee of a registered retirement savings plan ("RRSP") trust holding non-performing assets could place the RRSP in overdraft as a means of advising the client that the RRSP's trustee and/or administration fees (the "Fees") have not been paid and as a means of recordkeeping to record the outstanding balances for internal purposes.
In a case where the terms of an RRSP trust allows the trustee to collect its unpaid fees from the trust property and the trust only holds non-performing assets thereby preventing the trustee from recovering its fees, we are of the opinion that any resulting overdraft may constitute the borrowing of money from the trust or the use of property of the trust as security for a loan such that paragraph 146(4)(a) or paragraph 146(10)(b) of the Income Tax Act could apply.
We trust the above comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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