26 February 1997 Ministerial Letter 9700678 - RRSP ADMINISTRATION 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:

Payment of expenses related to RRSPs

Position:

1)Admin or trustee fees can be paid by either annuitant or rrsp;
2)Management fees are an expense of the rrsp;
3)Investment counselling fees for advice to the annuitant are an expense of the annuitant;

Reasons:

1)There is support for treating the administration fees as either an expense of the RRSP or the annuitant.

2)Management fees are for managing the property of the rrsp trust;

3)Investment counselling fees are contracted fro by the annuitant.

DM'S OFFICE (2) DM #96-1855D
ASSOCIATE DEPUTY MINISTER (1)
ADM'S OFFICE (2)
PENDING
RETURN TO INCOME TAX RULINGS
AND INTERPRETATIONS DIRECTORATE
15TH FLOOR, ALBION TOWER

Signed on February 26, 1997

XXXXXXXXXX

Dear XXXXXXXXXX:

I am responding to your letter dated December 13, 1997, addressed to my predecessor, Mr. Pierre Gravelle, concerning Revenue Canada's income tax treatment of investment counselling fees that pertain to investments within a self-directed registered retirement savings plan ("RRSP").

I understand that you recently discussed this issue with Mr. David Duff of the Income Tax Rulings and Interpretations Directorate. As Mr. Duff mentioned, in a situation where the annuitant of an RRSP trust enters into a contract with a person for advice on the purchasing and selling of investments of the RRSP trust, the fees for such advice are obligations of the annuitant and not of the RRSP trust. The payment of such fees by the annuitant is not a gift or premium to the RRSP. However, these fees cannot be deducted by the annuitant.

The Department considers certain expenses, such as commissions, and brokerage and management fees, to be expenses of the RRSP trust. Management fees related to the management of the property in the RRSP trust include custody of the investments, maintenance of the records, and collection of the income. If the annuitant pays these fees directly, the Department considers this to be a contribution to the RRSP.

The change in position you referred to was with respect to the administration or trustee fees of an RRSP trust and not investment counselling fees.

Should you require any further assistance, I invite you to contact Mr. Duff by telephoning 0-(613) 957-8979 collect or by writing to him at 15th floor, 25 Nicholas Street, Ottawa, Ontario, K1A 0L5. He is aware of our correspondence and would be pleased to assist you.

I trust my comments have addressed your concerns.

            Yours truly,

            Rob Wright

Frank Gillman
957-2131
970067
January 30, 1997

Finalized 97-02-14 - DJ/lv