Bad News: CRA Clarifies Seg Fund ITCs

As we blogged on here, CRA has recently taken steps to reverse what was generally understood to have been their historical position on employer eligible ITCs in pension plan situations involving insurance segregated fund products.

In a recent Excise News Publication, CRA doubles-down on this position in a very public way, seemingly setting the stage for audits in this area to come.

Background

As referenced in our previous blog, a CRA ruling in 2012 had previously left the door open for employers with pension plans funded through an insurer's segregated funds to claim ITCs on any GST/HST paid on investment management fees taken directly out of those funds.

In 2023, CRA interpretation reversed that view, stating that employers were in fact not entitled to claim ITCs on any investment management fees taken out of an insurer's segregated funds, a potentially unexpected change for those who had claiming ITCs per the previous ruling.