IFIC is encouraging a government review of the GST and HST treatment of financial services.
Mutual fund holders pay four to five times more GST or HST per $100 of value-added than owners of GICs, equities, bonds and other non-fund financial vehicles.
Canada is an outlier compared to most of the more than 140 value-added tax (VAT) jurisdictions, effectively taxing rather than exempting mutual funds. Canada is also the only one of these countries applying federal and multiple provincial rates of tax, adding needless and costly complexity.
While sales tax harmonization is economically desirable in principle, sales tax legislation should be amended to levy the GST and HST on financial products and services in a way that is fairer to investors, economically neutral and administratively efficient.