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The Canada Revenue Agency has confirmed it will delay taxing registered account investment fees paid from open accounts “indefinitely,” pending a review by the Department of Finance.

As reported Monday, CRA shared this news with the Investment Industry Association of Canada (IIAC) on a telephone call last week. CRA confirmed to that officials from the Income Tax Rulings Directorate also spoke with the Investment Fund Institute of Canada and the Canadian Life and Health Insurance Association.

“The purpose of the conference call was to inform them that the CRA was indefinitely postponing the application of the advantage rules and tax to investment management fees until the Department of Finance finished their review of the issue,” said Etienne Biram, a representative from CRA’s Public Affairs Branch, in an emailed statement. The directorate formalized this position in a follow-up letter that specifically referred to the CRA’s past releases on registered fees paid from open accounts.

This delay represents a win for industry associations, as well as clients who pay registered plan fees from non-registered accounts.

At the November 2016 Canadian Tax Foundation Conference, CRA told attendees that paying registered plan fees from non-registered accounts would incur a tax penalty equivalent to the fee (e.g., if an investor pays a management fee of $500 from outside a registered plan, the investor could be taxed the full $500). CRA said the practice creates an unfair advantage because it’s equivalent to a tax-free increase in the value of the registered plan. At the time, CRA said it would implement this position in January 2018. The federal tax agency later delayed that implementation to January 2019 before postponing it indefinitely.

In June 2017, James Carman, senior policy advisor of taxation at IFIC, explained why the organization disagrees, in part, with CRA’s position. “We do not believe the advantage rules in this scenario should apply to registered plans—RRSPs and RRIFs. It can’t be assumed that the investor is always going to be better off paying investment management fees outside the registered plan. […] Usually it takes a fairly substantial amount of time to derive a tax advantage by paying the fees outside the plan.”

He also explained that there’s often a non-tax reason to pay fees from a non-registered account, such as liquidity. “The reason most retail investors pay [registered account fees] outside of the plan is not to gain a tax advantage,” said Carman last June. “It’s simply a matter of convenience.”

On Monday, CRA released its long-awaited income tax folio explaining how the tax advantage rules will apply to RRSPs, RESPs, RRIFs, RDSPs and TFSAs. The folio targets aggressive planning such as swap transactions, arrangements that artificially shift taxable amounts into registered plans, and what’s known as registered plan stripping (withdrawing money while avoiding a taxable event). Read more here.