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CRA Confirms Paying Fees from Outside RRSP or TFSA Accounts Not an Advantage
 
January 2020

After nearly three years, the uncertainty has ended for investors who pay the management fees on registered accounts like RRSPs and TFSAs from outside those accounts.

The Department of Finance has released a so-called “comfort letter” to commercial tax information
providers saying the department will recommend an amendment to the Income Tax Act’s definition of "advantage" to exclude the practice of paying for investment management fees from funds outside of registered plans.

In 2016, the CRA said it viewed this practice as creating an unfair advantage because it was equivalent to a tax-free increase in the value of the registered plan. In other words, paying fees from outside registered accounts would preserve registered capital.

Ever since, industry groups such as the Investment Funds Institute of Canada and the Canadian Life and Health Insurance Association have been consulting with the CRA to halt the proposed implementation, saying that clients who pay fees outside registered accounts aren’t usually tax-motivated.

If you have questions about payment of fees on your registered accounts, contact your GP Wealth financial advisor.

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We encourage you to explore the links in the right sidebar. They'll take you to articles with answers to many common tax questions. You'll also find information and ideas that will help you plan a more effective tax strategy for you and your family. If you have any questions, send us an email and we would be pleased to help.
 
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