FP Canada lobbying feds for financial planning tax credit

FP Canada wants the federal government to introduce a tax credit to encourage low- and middle-income Canadians to obtain financial planning advice.

The credit would be available to those accessing financial planning for the first time, and high earners who can already afford advice would not be eligible, according to a policy paper released earlier this month.

FP Canada commissioned the paper from the StrategyCorp Institute of Public Policy and Economy, the think tank of lobby firm StrategyCorp Inc. StrategyCorp is also registered to lobby the federal government on FP Canada’s behalf.

Canadians can deduct fees for investment advice in non-registered accounts on line 22100 of their tax returns, but fees paid for financial planning can’t be claimed.

The paper proposes a refundable tax credit for financial planning similar to the Canada Training Credit, which helps pay for training fees.

“Any tax credit meant to alleviate the perceived cost barrier associated with seeking financial planning services should be refundable in order to be of sufficient value to potential users,” the paper said. “The assurance of a reimbursement is in this regard extremely important to drive behavioural change.”

The U.S. eliminated a tax deduction for financial planning fees in 2017 after it was criticized for benefiting the wealthy. Adding financial planning fees to the eligible expenses for line 22100 would likely have a similar outcome, the paper said.

It proposes a credit with a maximum amount that could be withdrawn over time.

“To reflect the life cycle of a typical financial planning engagement, the tax measure could help with the fees associated with both the development of the initial financial plan and subsequent review and implementation meetings,” it said.

Only plans covering advice “across multiple areas” should be eligible, it said.

The paper said only about 4% of Canadians work with a financial planner. A refundable credit would provide an incentive to low- and middle-income earners who may see the cost as a barrier.

Improving access to financial plans would improve the resilience of Canadian households and the broader economy, the paper argued.

FP Canada president and CEO Tashia Batstone reported meetings last fall with policymakers in Ottawa, including MPs, senators, and staff at the Prime Minister’s Office and the Canada Revenue Agency, according to the federal lobbyist registry.

Mark Burgess

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Mark was the managing editor of Advisor.ca from 2017 to 2024.