Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 209409
Dear: [Client]
Subject: GST/HST RULING
Tax Status of Financial Planning Services
Thank you for your letter of April 13, 2020, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to the activities of […][the Company].
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand the following facts based on the information you provided.
1. […][The Company] is a GST/HST registrant located in […][Province A]. The services performed [in Province A] by the Company are performed by a certified financial planner employed by the Company.
2. The Company focuses on general financial planning advice centred around tax advice and planning and estate services.
3. The Company does not provide legal or accounting advice and does not practice law or accounting when providing financial plans to its clients.
4. The Company has provided us with a sample […] agreement with the client to perform financial planning services. The services performed by the Company include the following:
a. reviewing the client’s current financial status before making recommendations on a financial plan;
b. reviewing the client’s estate plan, if the plan requires updating the Company refers the client to an attorney;
c. reviewing the insurance policies held by the client and making an assessment on the appropriate risk level,
d. using technology to prepare projections and create a financial plan that addresses the client’s retirement, education and other future goals;
e. referring the client to the appropriate professional including referring the client to a financial brokerage firm.
5. The Company receives a specific fee that may be by the hour or a fixed fee with a quoted fee range for each financial plan provided. [Hourly] Fees range from […] $[…] to $[…] […].
6. Clients are under no obligation to follow any recommendation or advice provided by the Company. The Company does not receive any commissions that may result from the implementation of the client’s financial plan, unless fully disclosed to the client.
RULING REQUESTED
You would like a ruling to know whether the fee received for financial planning services are subject to GST/HST.
RULING GIVEN
Based on the facts set out above, we rule that the hourly fees paid to [the Company] for financial planning services [performed in Province A] are taxable at the [Province A] rate of […]%.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling given in this letter provided that: none of the issues discussed in the ruling are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 343-571-0207. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Hélène Lacasse
Manager
Insurance and ITC Allocation Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
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