Archive for September, 2010

Back from Vacation and Ready to Study !!!

Hi All,

I am back from vacation and back to work. At present, I’m completing the last course required for the first of two CFP final exams. It’s been very comprehensive, and we have covered a lot of material from tax to estate planning. We intend to write in November so will keep you all posted as to how we do.

In the meantime, Ontario has gone HST. The financial services industry is still in a quandry as how this affects us all regarding service fees. Here is a recent article on how the mutual fund companies are trying to deal with it. Remember this is for informational purposes only folks.


Fund Industry News

Release Date: 19-Aug-10 04:00 PM

Fund industry divided over tackling HST

Vikram Barhat

A tug-of-war is developing as fund companies try to find the fairest solution for dealing with the inequality of the HST as it relates to mutual-fund investors.

Much has been written about the various options pursued by fund managers across Canada since the introduction of the HST in Ontario and British Columbia on July 1. Undeniably, this has created some confusion among investors and advisors as to which alternative is in their best interests.

Most companies opted for a blended tax rate, while a handful have chosen to introduce non-HST series. Both camps claim to have kept investor interest front and center.

A month later, as the clouds of confusion begin to lift, there seems to be a trend emerging that suggests the industry is leaning heavily towards the blended rate alternative.

“Considering the options presently available, we strongly believe that as fund fiduciaries the best course of action for our investors is to adopt a blended tax rate rather than create a separate non-HST series,” says Peter Intraligi, president and COO of Invesco Trimark.

Intraligi says the decision to proceed with the blended tax rate approach was the result of a through and detailed analysis of available options.

The HST implementation rules drafted by the federal government require that the HST be calculated separately for each series of each fund in proportion to the amounts invested by residents of the HST-participating provinces when compared to the non-HST provinces. The HST is currently being collected in B.C., Nova Scotia, Ontario, New Brunswick, and Newfoundland and Labrador.

“In practical terms, this will result in the application of a blended rate of HST to each series of each fund,” says Intraligi.

Early adopters of the non-HST series are quick to point out tax fairness and potential MER savings associated with their concept. They argue that non-HST residents will benefit from lower MERs in a non-HST series and pay lower tax rate applicable in their province.

Intraligi understands the arguments, but asserts treating groups of investors differently is inconsistent with the pooling concept of mutual funds and could lead to future inequalities.

“Where would it end?” he asks. “If a new series can be launched for residents in non-HST provinces, then why shouldn’t there be a separate series created for the BC residents? After all, their HST rate is 12% versus 15% for Nova Scotia residents.”

As the debate continues, some members of the industry choose to reserve their judgment.

Joanne De Laurentiis, president and CEO of the Investment Funds Institute of Canada (IFIC) says while the scales do seem to be tilted towards the blended rate, it would be rash to take sides.

“They both have their pros and cons,” she says. “It’s almost premature at this point of time to say one is better that the other.

While admitting that most funds are indeed going the blended rate way, she says it may take up to a year to get a clearer picture, in part because the rules are not yet final. “The next set of draft rules that we’re going to see is in November. There’s still lots of open questions for many firms.”

Industry watchers say the rules of the game will continue to evolve due to many reasons, not least of which is more provinces getting harmonized going forward.

Reproduced with permission from



Mutual Funds provided by FundEx Investments Inc.