Trust Administration Fee – TAF (British Columbia)
In some Canadian jurisdictions (BC), lawyers must remit a $15 trust administration fee for each distinct client matter in connection with which trust funds are received on or after March 1, 2005, unless the trust funds are solely for the purpose of paying legal fees or to be held as a retainer.
Description: The Trust Administration Fee (TAF) of $15 + tax as a one-time charge to clients/matters, charged if a lawyer handles trust funds not used as a retainer or as payment for client expenses. Clients/matters are not charged the TAF twice. Lawyers also have the option of recording the fee as a disbursement to the firm, rather than charging it to the client/matter.
Lawyers must remit the trust administration fee collected or allocated to a client file for the previous quarter within 30 days of the end of that quarter (Rule 2-110).
Remittances must be received by the Law Society by:
April 30 (for remittances covering the three-month period ending March 31)
July 31 (for remittances covering the three-month period ending June 30)
October 31 (for remittances covering the three-month period ending September 30)
January 31 (for remittances covering the three-month period ending December 31)
$15 fee (taxable)
Source: Law Society of BC
How to Enter Trust Administration Fee in CosmoLex
In CosmoLex user needs to manually record this charge with with correct amount/taxes to applicable matters. This article provides specific steps:
One Time Initial Setup
If you intend to pay TAF as a normal firm expenses and not charge to clients, in Accounting, create a separate chart of account of type Expense and title it “Trust Administration Fee”.
In Contact -> Payee, create a payee “<Law Society Name> - TAF” for easier identification.
Trust Administration Fee Entries
For each applicable matter, Under Accounts Payable, enter a bill payable to the newly created payee “<Law Society Name> - TAF”. You may want to capture Matter’s File # in the bill’s Ref # block for easier identification.
If TAF is paid as normal firm expense, under Account, select the newly created chart of account for TAF Expenses.
If TAF is charged to the client, select “Post as Matter Expense” and select the appropriate Matter. This will create a disbursement entry for the matter and will be included in the next invoice to the client.
At the end of the Quarter or when funds are to be remitted, select all of these unpaid Bills payable to “<Law Society Name> - TAF” and pay using a single check.
At any time, to see detailed listing of recorded TAF charges: [This is a new report we are adding. This will itemize listing of bills for individual payee or all payee in a given date range along with listing which matter it was paid for. It will include all bills, paid or unpaid so user can go back and tally. This report would be useful for many other purpose also].
Go to : Accounting -> Account Payable Payee Ledger
In Payee, choose “<Law Society Name> - TAF”
Choose the Date Range and generate the report
Periodically run this report to ensure you did not charge a client-matter twice or you did not miss entering bill for an applicable matter.
Amount & HST Entry:
When entering the TAF bill, enter amounts as following:
Amount = $15
GST = $0.75
PST = $0
Total = $15.75
If TAF is charged to client, program will automatically charge the TAF amount + GST/PST to the client as a taxable disbursement item on next bill. At this time in CosmoLex, you would need to manually edit the expense card and remove the PST portion of the tax. Collected and paid GST will be part of the Input Tax Credit Calculations.