23 January 1997 External T.I. 9639585 - INVESTMENT COUNSEL FEES, RRSP

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:

Are investment counsel fees contracted for by the annuitant expenses of the RRSP or RRIF trust?

Position:

No

Reasons:

Where contract is entered into by annuitant for services to be provided to annuitant then considered expenses of annuitant not RRSP or RRIF trust.

	                      	963958
XXXXXXXXXX	                          M.P. Sarazin

Attention: XXXXXXXXXX

January 23, 1997

Dear Sirs:

Re: Investment Counsel Fees

This is in reply to your facsimile dated November 27, 1996, wherein you requested our opinion as to whether fees paid by an individual for general investment counsel services including investment strategies with respect to his or her self-directed registered retirement savings plan ("RRSP") or registered retirement income fund ("RRIF") would be considered a premium paid to the plan or fund, as the case may be.

You are of the view that such fees relate to the individual's obligation to provide the trustee of the self-directed RRSP or RRIF with investment instructions and, as a consequence thereof, the fees cannot be considered expenses of the particular RRSP or RRIF. If this is the case, then the fees pertaining to the investment strategies relating to the self-directed RRSP or RRIF could not be considered premiums or gifts contributed to the particular plan or fund.

The determination of whether investment counsel fees or a portion thereof would be considered expenses of a RRSP or RRIF trust is a question of fact that can only be determined after a review of all of the facts pertaining to each particular situation. However, where an annuitant of an RRSP or RRIF trust enters into a contract with a person for advice on the purchasing and selling of investments of the trust (i.e. the contract is between the annuitant and the person), it is the Department's position that the fees for such advice are an obligation of the annuitant and not of the RRSP or RRIF trust. We have reconsidered our previous position with respect to the payment of such fees by the annuitant outside of the RRSP or RRIF trust and we are now of the view that the payment of such fees by the annuitant would not be considered a premium or gift contributed to the RRSP or RRIF.

As stated in paragraph 4 of Interpretation Bulletin IT-124R6, such fees are not deductible to the annuitant pursuant to paragraph 20(1)(bb) of the Income Tax Act because the annuitant is not the owner of the investments.

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