Court case means big GST refund for investors
By Gordon Powers, Sympatico / MSN Finance
Canadian investors who been paying for discretionary investment management, where the manager makes all the buying and selling decisions on their behalf, may be entitled to a refund on Goods and Services Tax (GST) that has been incorrectly charged to their accounts.
In a recent ruling, the recent Federal Court of Appeal concluded that fees paid by the Canadian Medical Protective Association to its investment managers were in fact ‘exempt’ financial services. As a result, the CMPA is now entitled to recover the GST it paid on such management fees.
And so are you.
Of course, the government may simply decide to amend the GST legislation in order to effectively overrule or squash the Court’s decision, says Heather Weber, a Partner with the accounting firm Meyers Norris Penny in Kelowna.
In the meantime, if you’ve been paying for discretionary fund management services and have been unnecessarily overcharged, you should apply for a rebate of the GST paid on such fees, she advises. Unfortunately, although the GST has been around for 18 years now, rebate applications are subject to a two year limit from the date of payment.
And yes, despite this ruling, investment managers are likely to continue to collect GST on behalf of the CRA until it tells them not to.
Nothing like changing the rules after the game has started ... another cause for political protester Bill Tieleman?