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 management fees paid in respect of RRSPs deductible?
Position: No
Reasons: 20(1)(bb) does not provide for the deduction unless certain conditions are satisfied.
XXXXXXXXXX 983160
M. P. Sarazin
January 26, 1999
Dear Sir:
Re: Deductibility of RRSP Management Fees
This is in reply to your letter dated November 26, 1998, wherein you requested our views with respect to the deductibility of management fees relating to a registered retirement savings plan (“RRSP”).
You have been advised that management fees relating to RRSPs are not deductible because the fees do not relate to income earned by you in the year. It is your view that since you have collapsed portions of your RRSPs from time to time, there is income declared from the RRSPs and the management fees relating to the RRSPs should be deductible.
The Department has issued the enclosed Interpretation Bulletin IT-238R2 which deals with the deductibility of fees paid to investment counsel. Paragraph 7 of the IT-238R2 deals specifically with fees related to RRSPs and it states:
“Fees charged by the trustee of a registered retirement savings plan directly to the annuitant are not deductible by the annuitant pursuant to the provisions of paragraph 20(1)(bb), as the shares or securities of the plan belong to the trust and not the annuitant.”
Since the fees relate specifically to property held within the RRSP, paragraph 20(1)(bb) of the Income Tax Act does not allow the annuitant to claim such fees in computing his or her income. The enclosed copy of our standard letter dated February 23, 1998 provides our general views regarding the payment of management fees and investment counsel fees for advice relating to property held in an RRSP or registered retirement income fund.
We trust that our comments will be of assistance.
Yours truly,
Paul Lynch
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
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