21 October 1996 External T.I. 9634325 - RRSP INVESTMENT MANAGEMENT FEES

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:

RRSP investment management fees

Position:

Confirming position that investment management fees paid by annuitant are considered payment of a premium to RRSP but not a gift to RRSP for section 146 and Part X.1 purposes.

Reasons:

Routine.

XXXXXXXXXX							963432

October 21, 1996

Re: Investment Management Fees: Registered Retirement Savings Plan ("RRSP")

This is in reply to your facsimile transmission of October 16, 1996, in which you ask us to clarify our position on the payment of the above-noted fees with respect to an RRSP.

INVESTMENT MANAGEMENT FEES

1.Description: These are expenses relating to the administration or management of the property in an RRSP trust. For more information please refer to the description in paragraph 4 of Interpretation Bulletin IT-238R2 (e.g., fees relating to the manager's services of providing custody of securities, maintenance of accounting records, collection and remittance of income, and buying and selling on behalf of the owner).

2. Method of Payment:

By RRSP trust - these fees are properly expenses of the trust and when paid with trust funds there are no tax consequences to the annuitant.

By the annuitant - this payment of the RRSP trust expenses will constitute the payment of a premium to the RRSP for purposes of section 146 and Part X.1 of the Act. As such, the payments will be deductible to the extent that the annuitant has a sufficient RRSP deduction limit and the annuitant will incur an over-contribution tax if the annuitant has an excess amount of undeducted contributions. Please refer to the 1995 RRSP and Other Registered Plans Guide at pages 12 and 13 for a discussion of this tax.

We trust our comments will be of assistance to you. The Guide and Interpretation Bulletin referred to in this letter are available at your local tax services office which is listed in the blue pages of the telephone directory.

Yours truly,

for Director
Financial Industries Division