CRA considers a referral bonus received by a registered plan to be a directed contribution to the plan

S. (a)(v) of the advantage definition in s. 207.01(1), as paraphrased by CRA in Folio S3-F10-C3, excludes “a promotional incentive under a program offered to a broad class of persons in a normal commercial or investment context.” When asked to elaborate, CRA indicated inter alia that:

[W]hether an incentive offered only to a “select group” of clients would qualify for the exception would depend on the size of the group relative to the financial institution’s client base as a whole as well as on the particular criteria used to select eligible investors. A recent example we considered not to be an advantage was an investment fee incentive offered only to members of a particular professional group and their immediate family members.

and that:

[F]actors indicating that an incentive program is not commercially reasonable would include disproportionate benefits relative to investment size, parties acting in concert and other commercially unreasonable behaviour that suggests a main purpose of the arrangement is to allow the investor to benefit from the registered plan’s tax exemption.

CRA also indicated that a referral bonus paid into a registered plan is a contribution to the plan. It reasoned:

[A] referral bonus is paid as a consequence of the relationship between the existing investor and the new investor. When a registered plan is involved, it is actually the plan’s controlling individual who earns the referral bonus, not the plan itself. Therefore, if payment of the referral bonus is directed to the registered plan, we would consider it to be a contribution or premium paid to the plan by the controlling individual.

Neal Armstrong. Summaries of 3 April 2020 External T.I. 2019-0830101E5 under s. 207.01(1) – advantage - (a)(v), and s. 146(1) – premium.