Finance Minister Jim Flaherty said Monday that there will be no additional GST on financial services following heated discussion about a new proposed tax policy that appeared in the federal budget earlier this month.
The debate is over a notice by the Canada Revenue Agency, which said it had plans to broaden the application of GST on financial services professionals like mortgage brokers, insurance agents, and financial advisors, who have so far been exempt from the tax. Flaherty denied this change Monday, blaming it on poor wording in the budget document.
"We will have the tools in the first Budget Implementation Act to make sure we get back to the status quo before the court cases, so people can rest assured that the tax treatment of defined financial services will not change," Flaherty said, adding that businesses still need "clear GST rules" - rules that won't be clarified until Canada Revenue Agency releases an explanation in the coming weeks.
Provincial mortgage associations IMBA, MBABC and AMBA have come together to fight the potential tax rule change, which IMBA said could cut broker commissions by 13 per cent if implemented. CAAMP has also been vocal on the matter, saying it has communicated with auditors and government officials for clarification on the issue.
"We're cautiously optimistic that they will listen to what the negative consequences of such a change would be," Murphy told CBC News last week, "and that they will continue with the current status quo."