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Wealth Professional | 14 Jul 2015, 08:50 AM Agree 0
Advisors are divided on a proposal that would create a tax break for clients – but only those using the fee-based model.
  • Janet | 14 Jul 2015, 10:01 AM Agree 0
    Why should people obtain a tax credit for financial advice? It is generally those who can afford it who obtain it. No tax credit....but please be more transparent about fees, whether they are embedded or not.
  • Mark Matsumoto | 14 Jul 2015, 11:11 AM Agree 0
    If they want to give people a break, they should just eliminate the HST on management fees.
  • Sarah Holland | 14 Jul 2015, 11:23 AM Agree 0
    Is the tax credit meant to be fee-based or fee-only? There can be a big difference.
  • Ross Birney | 14 Jul 2015, 11:32 AM Agree 0
    Fees paid directly by a client to their advisor for investment advice or management of their investments in regard to non-registered accounts have always been tax deductible. See section 20(1)(bb) of the ITA or IT-238R2.
  • Tony Battista | 14 Jul 2015, 02:15 PM Agree 0
    In a mixed open and registered portfolio the tax credit applies only to open accounts, but GST and PST apply to both. So why fee base for all?
  • Kathy | 14 Jul 2015, 04:28 PM Agree 0
    Fee only means you run your business advising clients, not selling products. A fee is charged for the advice given. It is quite simple and the term was started some 35 years ago. Fee-only financial planners are perceived as giving independent financial advice, with no hidden agenda.
    Unfortunately its interpretation has been massaged to allow those supplying products in addition to giving advice to be included in the fee-only category. Keep it simple and keep it clean to avoid the term being misinterpreted.
  • Will Ashworth | 15 Jul 2015, 12:11 PM Agree 0
    Great points everyone.

    I wrote the article because PIAC has called for a tax credit for fee-only financial planning which seems discriminatory in nature.

    I'd love to hear more feedback on this.

  • Mike Travers, Certified Financial Planner | 16 Jul 2015, 09:29 AM Agree 0
    On the comment about fees being paid by clients on unregistered accounts always being tax deductible, my understanding is PIAC is suggesting a tax credit, which is a little different. I also agree with Janet that it's generally those who can afford that benefit.

    But getting back to the tax deductibility, the provision on Schedule 4 should remove the restriction on fees for RRSPs or RRIFs. I believe there should be an allowance to deduct fees on registered accounts just like unregistereds, when fees are directly charged. This would open the door to F Class funds in an RRSP/RRIF account and provide another fee option for clients and advisors. Offer clients options, completely explain how those options work, everyone benefits.

    Such an allowance should add the ability for the account to deduct the fee from the registered investments without triggering a taxable event.

    I don’t believe that TFSAs should necessarily be given this allowance though as they already receive preferential treatment.
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