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:
Whether "benefit" to annuitant occurs where RRSP or RRIF funds used to pay administration fees.
Position:
No.
Reasons:
Change in position from 961123.
962714
XXXXXXXXXX P. Spice
Attention: XXXXXXXXXX
October 3, 1996
Re: Registered Retirement Savings Plan ("RRSP")
Use of Plan Funds to Pay Administration Fees
This is further to our letter of July 30, 1996 (962596), in which we advised that we were reviewing the position in our technical interpretation of May 24, 1996 (961123).
Our review is now complete and this will serve to confirm that it is now our position that there is no taxable benefit to an annuitant where funds inside an RRSP trust are debited to pay the reasonable administration fees. This position extends equally to the debiting of funds inside a registered retirement income fund ("RRIF") trust.
Where the annuitant pays the administration fees outside the RRSP or RRIF, the expense is not deductible after March 5, 1996, as proposed in the March 6, 1996 Budget. Such a payment outside the RRSP does not constitute a payment of a premium to the RRSP, or a gift for purposes of Part X.1 of the Income Tax Act.
As explained in the May 24, 1996 interpretation, administration fees relate to the overall direction and management of affairs of the RRSP or RRIF and are for the type of services normally provided by an administrator or trustee of an RRSP or RRIF.
We trust our 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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