22 August 1997 External T.I. 9720975 - RRSP, T1 PREPARATION 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:

Can fees for the preparation of personal income tax returns be considered administration or management fees of an RRSP or RRIF?

Position:

No

Reasons:

Such fees represent personal costs of the annuitant and not costs of the particular RRSP or RRIF.

                                     		972097
XXXXXXXXXX	                           M.P. Sarazin

Attention: XXXXXXXXXX

August 22, 1997

Dear Sirs:

Re: Preparation of Clients personal Tax Returns

This is in reply to your letter dated July 29, 1997, wherein you requested our comments as to whether fees for the preparation of personal income tax returns for your registered retirement savings plan ("RRSP") and registered retirement income fund ("RRIF") clients would be considered administrative fees or management fees relating to the particular RRSP or RRIF.

Administration fees relate to the overall direction and management of the affairs of the RRSP or RRIF trust and relate to the normal services provided by an RRSP trustee or RRIF carrier. Management fees relate to the administration or management of the property in an RRSP or RRIF trust. The Department has supplied a description of these fees in paragraph 4 of Interpretation Bulletin IT-238R2 as normally relating to the manager's services of providing custody of securities, maintenance of accounting records, collection and remittance of income, and the right to buy and sell on behalf of the owner using its own judgement. Consequently, fees for the preparation of personal income tax returns would not be considered administration fees or management fees in respect of the RRSP or RRIF. In our view, these fees represent a personal cost of the RRSP or RRIF client.

Where the fees for the preparation of personal income tax returns are paid by the RRSP or RRIF trust, we would consider the annuitant (your client) to have received a benefit from the particular RRSP or RRIF which must be included in his or her income. Pursuant to paragraph 153(1)(j) or 153(1)(l) of the Income Tax Act (the "Act"), withholding taxes with respect to the payment of such fees by the RRSP or RRIF, respectively, would have to be remitted.

The Department's views, with respect to the deductibility of fees for the preparation of personal income tax returns, are presented in paragraphs 5 to 7 of Interpretation Bulletin IT-99R4.

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