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The federal government has issued a notice aimed at clarifying the application of GST and HST to certain services inherent in investment funds.

The taxes are meant to apply to administrative, management and promotional services which are not deemed to be “financial services” under the Excise Tax Act.

Under the act, the following are not considered to be financial services:

• investment management services, including discretionary investment management services; • facilitatory services, comprising market research, product design, promotional services, advertising and the collection of information; and • credit management services in respect of a credit or charge card or similar payment card, or a credit, charge or loan account such as credit checking, authorization, valuation, record keeping and monitoring and dealing with payments.

The government will introduce legislation to codify these matters at an early opportunity.

“It is very important that the Goods and Services Tax rules be clear in order to reduce the compliance burden on business,” said Jim Flaherty, Minister of Finance. “The information that the government released today will clarify for financial services businesses their GST responsibilities.”

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BMO appoints regional VPs

BMO Bank of Montreal has appointed Christine Cooper as vice-president for New Brunswick and Prince Edward Island, in charge of 350 professionals and 27 branches.

“Throughout her career, Ms. Cooper has demonstrated a commitment to customer service while leading her teams to superior performance,” said Steve Murphy, senior vice-president, Atlantic provinces division, BMO Bank of Montreal. “She will ensure that our employees offer BMO customers a superior banking experience and personalized financial solutions during each branch visit or conversation.”

Cooper is an 18 year veteran, and most recently served as the bank’s senior relationship manager, corporate finance. She describes her focus as providing clarity surrounding financial choices and decisions.

The bank also announced the appointment of Bill Hogg as vice-president, commercial banking for Alberta and the Northwest Territories. Hogg assumes leadership of a team of 185 small- and medium-sized business and mid-market business account managers and support staff.

“Throughout his career, Bill has demonstrated a commitment to customer service while leading his teams to superior performance,” said Robert Hayes, senior vice-president, Prairies division, BMO Bank of Montreal. “Bill’s deep commercial experience and proven track record make him an ideal leader for this new commercial banking position.”

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IFRS conversion requires quick action

The new International Financial Reporting Standards (IFRS) accounting rules may not come into force until 2011, but for some organizations the changes are only weeks away.

Grant Thornton LLP is reminding organizations affected by the new rules that when IFRS financial statements are prepared, comparative figures must be included, and an opening balance sheet at the beginning of the comparative year is needed to do this. This means companies with a calendar year-end will need to prepare an IFRS opening balance sheet as at Jan. 1, 2010.

“Companies that fall behind in their IFRS preparations could be significantly impacted,” says Bruce Byford, the IFRS practice leader in Alberta for Grant Thornton LLP. “As 2011 approaches, time and expertise will be at a premium, so costs are likely to climb. On top of that, there are many decisions to be made before you can complete an opening balance sheet under IFRS.”

While the opening balance sheet includes amounts for all assets, liabilities and equity as though the company had always been applying IFRS, there are two options as to the method companies can use to calculate these opening amounts: apply IFRS retrospectively (i.e., recalculate the historical carrying amount using IFRS), or determine the fair value of the asset on transition and use this amount as the deemed cost going forward.

“Determining which method is right requires some thought and analysis,” says Byford. “For example, some companies may find it difficult to recalculate IFRS carrying values if the necessary data is not readily available or would be costly to obtain. In this scenario, using fair value as deemed cost may be an attractive alternative.”

Read more about the possible effect of IFRS on your business at www.grantthornton.ca.

(12/15/09)