Manitoba budget taxes

(April 20, 2004) The Manitoba government tabled its 2004 budget last night, which included a vague line that may have left advisors puzzled.

“Effective July 1, 2004, retail sales tax will be applied to certain legal, accounting, architectural, engineering, security and private investigation services,” the budget stated. “Currently, most provinces apply sales tax to these services. As well, the federal GST applies to these services.”

But according to a spokesperson for Manitoba Finance’s taxation division, the tax will not be levied on brokerage fees or financial consultants.

“It’s mostly for the preparation of a tax return [and similar services],” he said. “We don’t charge the tax on any consulting or advice of a general nature, or any investment or financial management services. It does not impact that at all.”

“It’s another 7% cost which may discourage some investors from getting the professional advice they may need, especially around tax season,” says Jamie Golombek, vice-president of taxation and estate planning at AIM Trimark. “If they’re going to have to pay another 7% on top of their tax advice — that may cause some people to think twice about whether tax advice is worth paying for. We believe it is, but this is just another barrier that could come into play.”

The Manitoba retail sales tax rate is currently 7%.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com