• HST and Management Fees -- Uncertainty Remains after Release of Federal and Provincial HST Legislation
  • December 28, 2009 | Authors: Beverly J. Gilbert; Craig J. Webster
  • Law Firms: Borden Ladner Gervais LLP - Calgary Office; Borden Ladner Gervais LLP - Toronto Office
  • On November 16, 2009, Ontario introduced its HST legislation as part of Bill 218, An Act to implement 2009 Budget measures and to enact, amend or repeal various Acts (“Bill 218”). Notably missing from the package of amendments to Ontario’s Retail Sales Tax Act (“RSTA”) contained in Bill 218 was any relief for the mutual fund industry in respect of the extra 8 per cent in taxes that the HST will add to management fees for management or administrative services supplied to mutual funds. In particular, the legislation has confirmed that management fees will not receive any provincial exemption from the new tax, as many in the industry had lobbied for. Hopes for clarity from the federal government on whether any relief from HST for management fees will be provided were dimmed with the release of federal HST legislation in the form of Bill C-62, An Act to amend the Excise Tax Act (“Bill C-62”) on December 4, 2009. To the extent they pertain to mutual funds, the provisions of Bill C-62 have effectively left the indu stry hanging until amendments to the regulations in the Excise Tax Act (“ETA”) are released.