I just updated TaxCycle minutes ago and I noticed a new warning and description changes on (formerly) Schedule 4 under IV - Carrying Charges. “Fees to manage or take care of your investments” now has a warning “this line should exclude any that is for investment counsel fees under paragraph 20(1)(bb) which should be entered on the line below. And the line below has changed to be described as “Investment counsel fees under paragraph 20(1)(bb).
I’m curious as to what led to this change? I don’t see any mention of it in the April 9 release notes. But mind you I’m running on a low tank!
I just noticed this as well. Can TaxCycle explain why this line was renamed? It previously had the label “Fees for investment advice.” I’m guessing this is just an administrative update to clarify that not all investment advice qualifies, but perhaps this was driven by something from the CRA?
“Fees for investment advice.” does not really have a place in the income tax act to allow deduction (since the phrase could be seen to be conflating expenses which are incurred in the production of income and those that are not).
I’m guessing the new Taxcycle wording is there to help tax preparers not to accidentally try to claim non-deductible expenses, by making clear that it has to comply with 20(1)(bb), the wording of which is specific.
I think that was a very good change to make.
My understanding is all of the deduction entries in part IV of the Investment Income & Carrying Charges Schedule in TaxCycle are aggregated and sent as a single amount that is recorded on line 12200 of T1 return.
With the exception of “Interest Expense” which is also recorded line 9913 of the EFILE Worksheet, as well as 67924 on the T691 (AMT Schedule) none of those individual carrying charges are transmitted to the CRA on an Efiled tax return. They simply appear as a total on line 12200.
I have a client who is the trustee of four trusts (his deceased father and three kids). CRA has checked the trustee and professional fees for a couple years. I wouldn’t be surprised if this is part of a CRA “project”. I also don’t understand the reasons, though.
Been trying to find some guidance on this. It seems they are separating recordkeeping from active involvement. So self-directed account fees on 1st line, full service accounts fees on the second. ???
@snoplowguy
For regular IT deduction calculations, 20(1)(bb), still allows this deduction.
However, Bill C-15 now amends S127.52(1)(j)(ii) to only allowing 1/2 this amount for AMT calculation, effective for taxation years 2024 and subsequent.
I see that “Investment Counsel Fees” along with interest on borrowed money flow to line 67924 of the T691 then are halved, whereas “Fees to Manage Your Investments” do not.
So even though the amount for “carrying charges” transmits to the CRA as an aggregated figure on line 12200, the software itself uses certain amounts from the individual carrying charges to properly calculate the AMT on schedule T691.
