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.
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear Sirs:
RE: Subsection 12(2.1) of the Income Tax Act (the "Act")
This is in reply to your letter of November 5, 1993 concerning amounts paid by a fund manager to specific investors in a mutual fund trust.
As your letter relates to specific taxpayers, confirmation of the tax consequences of the proposed transactions will only be provided in the context of an advance income tax ruling. Nevertheless, we are able to offer the following general comments which may be of assistance to you.
Normally, a mutual fund trust (the "trust") pays a fund manager to manage its assets and such payments would be deductible by the trust provided they meet the conditions specified in paragraph 20(1)(bb) of the Act. Often the fund manager will rebate a portion of that management fee direct to certain investors of the trust, in particular, those who have substantial amounts invested in the trust. The rebate is based on the amount of the particular investor's investment in the trust. Although the rebate is paid to a particular investor, it pertains to the management of the assets of the trust. Accordingly, by virtue of subsection 12(2.1), paragraph 12(1)(x) of the Act applies to include the rebate in the income of the trust.
XXXXXXXXXX
As discussed with you (Watson/XXXXXXXXXX) further submissions with respect to this issue will only be considered in the context of an advance income tax ruling.
These comments do not constitute an advance income tax ruling. They are provided in accordance with the procedures outlined in paragraph 21 of Information Circular 70-6R2.
Yours truly,
for DirectorManufacturing Industries, Partnerships and Trusts Division Rulings DirectorateLegislative and Intergovernmental Affairs Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1994
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1994
Email this Content