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 an RRSP incur legal fees relating to mortgage property that it holds?
Position:
Yes
Reasons:
Costs relating to investments are costs of the trust.
970876
XXXXXXXXXX M.P. Sarazin
April 10, 1997
Dear XXXXXXXXXX:
Re: Expenses of Registered Retirement Savings Plan Trust
This is in reply to your letter dated May 27, 1996 which we received from the Toronto Tax Services Office on April 3, 1997, wherein you ask whether legal fees pertaining to a mortgage held in a registered retirement savings plan ("RRSP") have to be paid personally by the annuitant or by the RRSP. We apologize for the delay in responding to your request.
Fees relating to the investments of an RRSP trust are expenses of the RRSP trust. Such fees would include the costs of acquisition or transfer of investments, preparation of title documents, commissions, brokering, or the like.
Where legal services are retained in respect of problems relating to a mortgage held by an RRSP trust, the expenses relating to such legal services would be considered expenses of the RRSP trust that should be paid by the RRSP trust. We would expect that the trustee of the RRSP trust would have been aware of the problems requiring the particular legal services and that the annuitant acted on behalf of the trustee in seeking to resolve the problems relating to the mortgage. In the situation where the mortgage contract requires that the mortgagor pay the fees relating to such legal services, the RRSP trust may engage in litigation to recover such costs from the mortgagor to the same extent and in the same manner as would any reasonably prudent investor in the same circumstances.
Although the foregoing opinion is not binding on the Department, we trust these views are 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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