IFIC Proposes Federal Budget Measures to Strengthen the Economy and Support the Middle Class
August 5, 2016
Toronto - August 5, 2016 - The Investment Funds Institute of Canada (IFIC) today proposed federal budget measures that would contribute to Canadas economic growth, support the middle class, enhance retirement savings, and enable Canadians with disabilities to achieve better standards of living.
Our proposals align with the governments commitment to support middle class families so that they can save, invest and strengthen the economy, says Paul Bourque, IFICs president and CEO.
The industry is asking the government to address an anomaly introduced into the GST system by its architects in 1991 that resulted in mutual funds being taxed at a higher GST rate than other similar financial products. IFICs submission proposes that the government resolve the issue by qualifying funds for a 100% rebate of the GST paid. The benefit would flow through to investors by reducing the tax component of the funds management expense ratio.
The submission notes that the rebate would increase an investors accumulated earnings, enhancing their returns and freeing more money for investment in the capital markets. Since a high proportion of investment funds are registered retirement savings plans, the rebate also would lead to higher retirement income levels, reducing dependency on public retirement income supplements such as OAS and the GIS.
The industry is also calling on the government to improve access to higher education by increasing awareness of, and making improvements to, Canada Education Savings Grants (CESGs) and Canada Learning Bonds.
Canadas future economic growth will depend on a well-educated workforce, but Canadians ability to save for their childrens education through RESPs is being dwarfed by escalating post-secondary education costs, Bourque says. We propose increasing the lifetime CESG limits to $9,000 and removing the $500 annual limit on matching CESG grants.
In addition, the investment funds industry supports changes to the rules governing group RRSPs. The changes would encourage employers to offer these accessible and efficient plans to their employees. Measures that would make group RRSPs more attractive to employers include: locking in employer contributions so that they can only be used for retirement savings, exempting employer contributions from payroll tax so that group RRSPs will be on the same footing as other pension plans, and enabling auto-enrolment similar to PRPPs, with employees retaining the right to opt out.
Finally, the industry recommends that the government eliminate barriers to setting up and participating in Registered Disability Savings Plans.
By eliminating these barriers, the government will be contributing to better standards of living for Canadians with disabilities and increase their ability to make meaningful contributions to Canadas economy, Bourque states.
The Investment Funds Institute of Canada is the voice of Canadas investment funds industry. IFIC brings together 150 organizations, including fund managers, distributors and industry service organizations, to foster a strong, stable investment sector where investors can realize their financial goals. By connecting Canadas savers to Canadas economy, our industry contributes significantly to Canadian economic growth and job creation. The organization is proud to have served Canadas mutual fund industry and its investors for more than 50 years.
For more information:
Sara Clodman, Senior Manager, Public Affairs, email@example.com, 416-309-2317For more information contact
Senior Manager, Public Affairs
The Investment Funds Institute of Canada (IFIC)
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