| 19(1) | File No. 5-8109 |
| Bill Guglich | |
| (613) 957-2102 |
July 10, 1989
Dear Sirs:
This is in reply to your letter of May 16, 1989 concerning the deductibility, under paragraph 20(1)(bb) of the Income Tax Act (the "Act"), of fees paid by your clients.
24(1)
OUR COMMENTS
In order for the fees paid to you by your clients to be deductible by the clients from investment income the following conditions must be met:
(1) The fees must be paid either for advice on buying or selling a specific share or security by the taxpayer or for the administration or the management of the shares or securities of the taxpayer; and
(2) The fees must be paid to a person whose principal business is advising others whether to buy or sell specific shares or whose principal business includes the administration or management of shares or securities.
The above conditions do not appear to be met in your case and consequently the fees paid to you by your clients would not be deductible to them under paragraph 20(1)(bb) of the Act.
Where a taxpayer reports his gains and losses respecting dispositions of her shares or securities on income account, the fees may be deductible under subsection 9(1) of the Act, as indicated in paragraph 5 of Interpretation Bulletin IT-238R2.
We hope our comments will be of assistance to you.
Yours truly,
E.M. Wheelerfor DirectorSmall Business and General DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch