| 19(1) | File No. 5-8568 |
| Blair P. Dwyer | |
| (613) 957-2744 |
September 19, 1989
Re: Paragraph 20(1)(bb) of the Income Tax Act (Canada) (the "Act")
This is in reply to your letter dated August 23, 1989, in which you asked for confirmation of earlier telephone advice concerning whether an annuitant under a RRSP may deduct administration fees charged by brokers for the management of RRSP investments.
Unfortunately, the telephone conversation seems to have resulted in a miscommunication.
Paragraph 20(1)(bb) of the Act allows a taxpayer to deduct certain fees paid to certain persons for administration or management services provided in respect of shares or securities "of the taxpayer". Due to the phrase "of the taxpayer", the taxpayer claiming the deduction must own the securities in question. Investments held in a RRSP trust are owned by the trust rather than the annuitant. Accordingly, the annuitant cannot claim a deduction under paragraph 20(1)(bb) for fees paid in respect of those investments. This is the position set out in paragraph 7 of Interpretation bulletin IT-238R2.
We trust that this letter clarifies our position. We regret any confusion that resulted from the telephone conversation.
The comments set out in this letter are of a general nature only and do not take into account considerations that might arise in the context of specific transactions or events. In accordance with paragraph 24 of Information Circular 70-6R, the opinions expressed herein do not constitute advance income tax rulings and consequently are not binding on the Department.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate