(September 7 – 16:30 ET) – Tax legislation that would have killed foreign exchange-traded funds for Canadian investors has been neutralized.
Today the Department of Finance announced that it will extend the comment period for the legislation from September 1 to December 31. The implementation date will be delayed by one year, to taxation years beginning after 2001. And “certain U.S. investment funds” — read ETFs — will be excluded from the new rules.
These changes to the government’s proposals come after an outcry against the proposed rules which would have made the popular foreign ETFs almost entirely useless to Canadian investors due to punitive tax treatment. A campaign spearheaded by an online investor advocate who goes by the name “Bylo Selhi” apparently caught the government’s attention.
The tax proposals affecting “non-resident trusts and foreign investment entities” were released with the 1999 federal budget. They are designed to limit tax avoidance through offshore trusts or accounts. On June 22, Finance released draft legislation for comment by September 1.
Investors complained that not only are the rules punitive, but the time to comment on them was too brief. Finance says, “Extending this deadline to the end of the year responds to a number of requests for more time to provide comments”.
-IE Staff