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:
Whether front end load charge on the purchase of an annuity contract that is a RRSP can be considered an administration fee, deductible as a carrying charge for the annuitant?
Position TAKEN:
No.
Reasons FOR POSITION TAKEN:
The fee which represents the agent's commission for selling the annuity contract is not an administration fee.
5-941332
XXXXXXXXXX L. Roy
Attention: XXXXXXXXXX
July 4, 1994
Dear Sir\Madam:
Subject: Deductibility of RRSP Administration Fee
This is in reply to your letter of May 16, 1994 in which you requested our opinion on whether a front end load on an RRSP bought by a client can be considered an administration fee, deductible as a carrying charge.
Your request appear to relate to a specific proposed transaction and accordingly should be the subject of advance ruling request. In view of the limited information you have provided in your letter, we cannot comment on the income tax consequences of the situation you have described. Without the additional information which would be provided with an advance ruling request, we can only offer the following general comment.
It is a question of fact whether a particular fee relating to an RRSP is deductible as a carrying charge. However, it is our view that a "front end load" charge which represents a commission to acquire property is not an administration fee deductible as a carrying charge.
We trust the above comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
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