4 June 2003 External T.I. 2003-0013645 - DISPOSITION INVESTMENT CONSEL FEES

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 CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues:

Are expenses paid for investment counsel fees from a disposition of securities still require the T5008 form to be issued.

Position: Generally Yes.

Reasons:

Two transactions, a disposition of securities and the use of the funds to pay investment counsel fees

							2003-001364
XXXXXXXXXX 						C. Tremblay, CMA
(613) 957-2139
June 4, 2003

Dear XXXXXXXXXX:

This is in reply to your electronic message of April 15, 2003, wherein you asked us to confirm the tax reporting requirements in a situation similar to the following example:

Mr. A redeems 20 units of a pooled fund, with total proceeds of $250.00. The redemption results in a loss of $100. Mr. A uses the proceeds to pay Investment Counsel fees for a certain period.

You ask whether Mr. A should receive a T5008 when Mr. A redeems the pooled funds for the purpose of paying investment counsel fees, and incurs a capital loss ($100 in the example above).

Our Comments

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. If, however, this situation relates to a factual situation and a completed transaction, it should be submitted to the appropriate taxation services office for their consideration. However, we are prepared to provide the following comments.

In our opinion, there are two transactions, a disposition of securities, which in the example above results in a capital loss. The disposition of securities is required to be reported under section 230 of the Income Tax Regulations and will require the filing of a T5008. The other transaction involves the payment by the taxpayer of an investment counsel fee which may be deductible under section 20(1)(bb) of the Income Tax Act.

While we hope our comments are of assistance to you, however they do not address all of the potential income tax implications nor do they constitute an advance income tax ruling and therefore are not binding on the CCRA.

Yours truly,

Steve Tevlin
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch