(June 6 – 16:10 ET) – The Investment Funds Institute of Canada says new tax amendments introduced last week will encourage the global development and expansion of the Canadian investment industry.
Currently foreign funds risk attracting Canadian tax liabilities unless restrictive conditions are met, a situation that hampers the hiring of Canadian investment management firms. IFIC complained that the current rules — and proposed budgetary changes — should be altered so that they no longer inhibit managers from playing on the world stage.
Specifically IFIC recommended that the 20% foreign content requirement should be removed or increased substantially, the arm’s length requirement should be deleted and the turnover requirement should be deleted. IFIC also recommended that the prohibition against Canadian investors investing in non-resident funds should be amended to allow certain Canadian investors, such as pension plans, to invest, and the qualified investment requirement should either be eliminated or amended.
IFIC says it “has been working with the Minister of Finance and his officials to ensure that the technical wording of the amendments actually bring about the desired results. The Department of Finance has been very open to the comments received from the industry, and this government-industry co-operation has resulted in amendments that allow the Budget objective to be achieved.”
“We are very pleased that the government has been so supportive of our industry with this competitive issue,” says Tom Hockin, IFIC president and CEO. “Canadian investment managers have valuable expertise to offer investors around the world and these changes will make this expertise more widely available.”
IFIC is confident that the proposed amendments will result in increased interest in Canadian investment management services from foreign funds, increasing Canada’s ability to conduct globally competitive business.
-James Langton