What to know as RRSP reporting measure takes effect

A tax expert says that identifying high-value RRSP s and RRIFs based on year-end fair market value could open the door to further investigation from the CRA .. Get exclusive investment industry news and insights, the week’s top headlines, and what you and your clients need to know. For more from Globe Advisor , visit our

“We can imagine that they would be using this information much in the way that they did with the TFSA balances, and that it’s a way of flagging individuals or cases for which they would be looking into having follow-up questions,” says Nicole Ewing, director of tax and estate planning at TD Wealth in Ottawa.

“They’re looking for more information to allow them to identify trends within RRSPs and RRIFs,” Mr. George says. “And if there’s anything unusual about the trends, then perhaps they’ll run an audit and see what types of investments are held and whether or not those investments are qualified for those registered plans.

Some audit activity will likely shift toward RRSPs and RRIFs as the CRA analyzes the reported information, though the emphasis may be different, she says. For example, TFSAs have been scrutinized for day trading because earnings within a TFSA are taxable when earned by carrying on a securities trading business. However, RRSPs and RRIFs must be both carrying on a businessusing non-qualified investments for earnings to be subject to taxation, Ms. Pearl-Weinberg says.

“Anything that would be risky from a tax perspective and involves an RRSP or RRIF, that would be something you might speak to a client about to consult with a tax advisor,” she says.

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