The Canada Revenue Agency (CRA) announced that the proposed implementation date for applying the advantage tax rules to investment management fees will be delayed until January 1, 2019. The rule could tax investment management fees paid outside of certain registered plans as an ‘advantage’ at 100 per cent rate.
Special anti-avoidance provisions is known as the advantage rules. These rules are designed to discourage transactions or events that would not have occurred in an open market in which parties deal with each other at arm’s length.
At the Canadian Tax Foundation Conference 2016, CRA stated that paying registered plan fees from non-registered accounts will incur a tax penalty equal to the fee (e.g., if an investor pays a management fee of $500 from outside a registered plan, the investor could be taxed the full $500).
IFIC president and CEO Paul Bourque said the postponement could not have come at a better time given the details of how the new rule will work have not been finalized.
