Claiming Investment Counsel Fees

Investment counsel fees are amounts charged for advice on investments. Some of these fees for investment advice are eligible to be claimed as a carrying charge, a deduction on the personal tax return. However, this is not the case for all fees. Here are the guidelines for advisors to share with their investor clients.

Investment counsel fees are only deductible if:

• They relate to investments in non-registered accounts. Any fees paid for investment advice on RRSP or TFSA investments are not deductible.
• The fees must be for advice on specific investments. Fees paid for general financial counseling or planning are not deductible.
• The fees must be “paid to a person whose principal business is advising others whether to buy or sell specific shares or whose principal business includes the administration or management of shares or securities” (per Interpretation Bulletin IT 238).
• The fees are reasonable.

Fees for the buying or selling of securities are not investment counsel fees. The fees related to the purchase of an investment are added to the cost base of the investment and reduce any capital gains on the sale of the investment. Fees related to the sale of an investment are deducted in the computation of the capital gain (or loss) on the investment.

Because of these restrictions, each fee deducted from a non-registered account must be examined to determine whether or not it meets the criteria.   Help from a qualified tax specialist is important, as carrying charges can be subject to audit, post tax-season.

Additional educational resources: Become an MFA™ - Retirement and Succession Services Specialist and help investors custom-design tax-efficient retirement income plans. Also, be sure to get up to speed on audit-proofing issues as a DFA-Tax Services Specialist, or learn in person at the Spring CE Summits. There’s still time to register for these live workshops coming to four Canadian cities between May 28 and June 4.

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