CRA suspends its proposal to impose advantage tax, where RRSP or TFSA fees are paid by the annuitant or holder, pending a Finance review
In 29 November 2016 CTF Roundtable Q. 5, 2016-0670801C6, CRA indicated that the payment of fees for investment management of an RRSP, RRIF or TFSA by the plan annuitant or holder typically would now be considered as an “advantage” giving rise to tax under s. 207.05(1) equal to 100% of the fee amount (noting inter alia under the hypothetical arm’s length test in s. 207.01(1) – advantage - (b)(i) that it would not be “commercially reasonable for an arm’s length party to gratuitously pay the expenses of another party”) - but that it would defer applying this new position until January 1, 2018 (subsequently extended by 2017-0722391E5 to January 1, 2019).
Hot on the heels of releasing its new Folio on Advantages, CRA has now stated:
[W]e will be deferring implementation of the position pending completion of a review of the issue by the Department of Finance Canada.
Neal Armstrong. Summary of 28 September 2018 External T.I. 2018-0779261E5 under s. 207.01(1) - advantage - (b)(i).