A professional paid his management company for 115% of the costs it purportedly incurred in managing his professional practice. However, the employees engaged in the provision of such services were employed by him and the management agreement was not signed. After noting that it could be considered that such fees were non-deductible pursuant to s. 18(1)(a), the Directorate went on to discuss s. 67, stating:
The position taken at [85 CR - Q.18], that the CCRA considers fees paid by a professional to a genuine management company that is related to be reasonable if they do not exceed 115% of the costs of such services, does not apply in cases where the company is merely the professional's agent. In the case of an agent … the fees paid by the professional should be reasonable and correspond to the fair market value of the services rendered by the agent. Furthermore, if it were a genuine management company and not an agent of the professional, the CCRA would question the deductibility of the … fee if the management company had no employees to perform the functions for which the professional was billed.