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 Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Would the position held in E9507325, that the reimbursement of redemption fees by the seller of other mutual fund units is not an advantage where the plan is an RRSP, be the same where the plan is an RPP;
Position:
Yes.
Reasons:
There is no similar advantage provision in section 147.1. Redemption fees would be considered to be derived from the provision of administration and investment services and would be a reduction in the plan's expenses.
5-980106
XXXXXXXXXX Fouad Daaboul
Attention: XXXXXXXXXX
April 15, 1998
Dear Sirs:
Re: Reimbursement of Mutual Fund Redemption Fees
This is in reply to your facsimile transmission of January 16, 1998, requesting our opinion on the treatment of the reimbursement of redemption fees charged by a mutual fund to a registered pension plan ("RPP").
You referred to our document number 9507325 in which we stated that, where a broker selling new mutual fund units reimburses a registered retirement savings plan (“RRSP”) for the cost of the redemption fees on old mutual fund units, the payment would not be an advantage pursuant to paragraph 146(2)(c.4) nor would it be income to the annuitant.
Where such a payment is made on behalf of an RPP it is our position that the amount is not a contribution to the RPP but would be a reduction in the plan’s expenses. We would not consider this to have any effect on the beneficiaries of the plan and there is no provision with respect to RPPs that is similar to paragraph 146(2)(c.4) for RRSPs.
We trust our comments will be of assistance to you.
Yours truly,
Paul Lynch
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy & Legislation Branch
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