| 19(1) | File No. 5-8449 |
| D.S. Delorey | |
| 957-3495 |
September 22, 1989
This is in reply to your letter July 4, 1989 regarding fees incurred in transferring your registered retirement savings plan (RRSP) in July 1988 form one company to two others, including a change of broker.
Your letter indicates that commission fees of 19(1) were incurred as a result of the transfer and that the amount of the RRSP funds transferred reflects a reduction of those fees. You would prefer to pay such fees personally, rather a reduction of those fees. You would personally, rather than have them paid our of your RRSP funds, but you have been advised by the involved companies that Revenue Canada, Taxation is adamant that all such fees are to be paid our of RRSP funds.
Paragraph 2 of the enclosed Interpretation Bulletin IT-124R5 sets out the Department's views regarding expenses incurred in respect of RRSP. As indicated therein, certain expenses such as commissions and brokerage fees are expenses of the trust governed by the RRSP (the RRSP trust) and not of the annuitant. A determination of whether certain fees represent expenses of an RRSP trust rather than the annuitant thereof is normally made by the trustee. From the limited information provided in your letter we can only assume that the trustee(s). Expenses of an RRSP trust are required to be paid our of the RRSP funds. Any contribution to the RRSP to offset such expenses of the RRSP trust would represent a premium paid under the RRSP, which premium together with any other premium paid during the year of within 60 days thereafter would be subject to the limitations set out in paragraphs 4 and 5 of IT-124R5.
You state that your superannuation contributions already account for the maximum deduction of $3,500 available under paragraph 146(5)(a) of the Act. With respect to your question as to whether or not you can now put back in your RRSP's the money that was taken out in 1988 to pay the subject fees, we presume you mean in addition to the $3,500 otherwise contributed for 1989. If so, such action would result in an excess $5,50, the extra taxes referred to in paragraph 26 and 27 of the bulletin would not apply. Nevertheless, if the non-deductible excess were not withdrawn within the time limits set out in paragraph 28 thereof, such excess would be taxable when received out of the RRSP(s).
We trust the above comments will be assistance.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate