The Canada Revenue Agency (CRA) isn’t applying automatic interest relief when trusts or individual taxpayers amend their tax returns to comply with a retroactive change to alternative minimum tax (AMT), the agency has told CPA Canada.
Bill C-15, which received royal assent last month, reduced to 50% the previously 100% allowed deduction of investment counsel fees, under the AMT rules.
The change is retroactive to 2024, resulting in many trusts and some high-net-worth individuals having AMT liability and needing to amend their tax returns for that year and possibly for 2025.
As previously reported, the CRA isn’t proactively reassessing affected tax returns, and affected trusts and individuals are expected to take steps to amend their returns as necessary.
Ryan Minor, tax director with CPA Canada, previously told this publication that CPA Canada had asked the CRA for interest relief for affected taxpayers that amend their tax returns because of the retroactive change.
The CRA has since responded that automatic interest relief isn’t being offered, Minor said in a LinkedIn post on Thursday. However, relief may be available depending on the particular case. Minor’s post included the CRA’s response to CPA Canada: “When interest is assessed following a reassessment, taxpayers may request relief under the taxpayer relief provisions. Requests are reviewed on a case-by-case basis, considering the specific facts and circumstances. All requests must be submitted formally and are reviewed in accordance with CRA guidelines.”
The reduced deduction of investment counsel fees follows AMT rule changes that passed into law in 2024.
AMT is an alternative tax calculation to ensure high earners and certain trusts pay a minimum amount of tax when they benefit from significant exemptions, deductions or credits.