26 October 1998 External T.I. 9820425 - EMPLOYER-PAID RRSP'S 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: Will the Department reconsider its position in respect of including employer paid group-RRSP fees as an employment benefit?

Position: No change in position.

Reasons: Amount paid by an employer for the benefit of an employee is considered employment income.

XXXXXXXXXX 				5-982042
					Fouad Daaboul
Attention:  XXXXXXXXXX 

October 26, 1998

Dear Sirs:

Re: Employer-paid Administration and Investment Counsel Fees under a Group RRSP

This is in reply to your letter of June 10, 1998, to Registered Plans Division, Revenue Canada, which was forwarded to us for reply, wherein you requested that Revenue Canada reconsider its position regarding the inclusion of an employment benefit for employer-paid administration and investment counsel fees under a group-RRSP, particularly in light of its recent revised position in respect of the payment of administration and investment counsel fees related to RRSPs.

Our comments

Administration fees and investment counsel fees relating to the affairs of a registered retirement savings plan ("RRSP") trust can now be paid by the annuitant or the RRSP trust without any tax consequences to the annuitant.

Although an RRSP is an individual retirement plan and a trust governed by a retirement savings plan is a contract or an arrangement between a trust and the individual, employers can set up group-RRSP's for their employees where each RRSP is administered separately and the terms of each plan are identical. Under a group-RRSP, the employer acts as an agent in making contributions to a plan. Thus, the contributions are employee contributions, which are normally done through payroll deductions, or employer contributions which are considered employment income. Contributions are subject to the individual's RRSP deduction limit.

Where an employer pays the fees associated with an employee's RRSP on behalf of an employee/annuitant, the Department's long standing position is that the RRSP fees paid by the employer constitutes an employment benefit under paragraph 6(1)(a) of the Income Tax Act to the employee/annuitant. We do not see any reason to revisit this position because an employee that has an employment benefit as a result of RRSP fees paid by his or her employer will be in the same position as a person who pays his or her fees with after tax dollars. The fact that it may difficult to allocate the group-RRSP fees paid by an employer to each particular employee/annuitant does not, in and by itself, support a change to the position.

We trust our comments will be of assistance to you.

Yours truly,

Paul Lynch
for Director
Financial Industries Division
Income Tax Rulings
and Interpretations Directorate
Policy and Legislation Branch