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The Voice of Canada’s Investment Funds Industry

News Release

IFIC Welcomes CRA Decision to Defer Application of Advantage Rules to Investment Management Fees


Toronto, ON – September 29, 2017 – The Investment Funds Institute of Canada (IFIC) welcomes the Canada Revenue Agency’s recent decision to defer by one year, to January 1, 2019, application of the “advantage rules” to the tax treatment of investment management fees.

“We appreciate the CRA’s decision to postpone implementation to allow time for investors and the industry to prepare for these changes,” says Paul C. Bourque, Q.C., IFIC’s president and CEO. “Since details of how the new rule will work have not been finalized, the new date will allow time for the CRA to finalize its implementation plans, for the industry to design outcomes that are in clients’ interests, and for advisors to inform clients of their options.”

The issue arises from an announcement by the CRA on November 29, 2016, indicating that an investment management fee paid outside of a registered plan would be considered an “advantage”. Under the “advantage rules”, the CRA can charge a 100% penalty tax on the advantage. In other words, if an investor pays an investment management fee of $500 outside of a registered plan, the investor could be taxed the full amount of $500.

The CRA’s original target date for implementation was January 1, 2018.

About IFIC

The Investment Funds Institute of Canada is the voice of Canada’s investment funds industry. IFIC brings together 150 organizations, including fund managers, distributors and industry service organizations, to foster a strong, stable investment sector where investors can realize their financial goals. By connecting Canada’s savers to Canada’s economy, our industry contributes significantly to Canadian economic growth and job creation. The organization is proud to have served Canada’s investment funds industry and its investors for more than 50 years.

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For more information:

Sara Clodman, Senior Manager, Public Affairs: sclodman@ific.ca  416-309-2317