IIAC says budget does not do enough for retirement savingsBy Andrew Rickard | March 30 2016 11:35AM
The Investment Industry Association of Canada (IIAC) is pleased to hear that the federal government is planning to review the tax system, but it is critical of budget measures dealing with Labour-Sponsored Venture Capital Corporations (LSVCCs), and the lack of enhancements to retirement savings vehicles.
In the recent federal budget, the Liberals indicated that they intend to conduct a review of the tax system with a view to eliminating poorly targeted and inefficient tax measures. In its response to the budget IIAC praised this initiative, and described it as "a process long overdue".
Tax credit for LSVCCs
However, several of the tax measures announced in the budget did not meet with IIAC's approval. One of these is the reinstatement of the 15% percent federal tax credit for LSVCCs, which IIAC argues will be less effective in helping small and mid-sized companies raise new equity capital than an incentive that would allow the marketplace and individual investors make the investment decision. The IIAC says it intends to raise its concerns in further discussions in coming months.
The IIAC is also disappointed that the Liberals did not introduce any measures to improve tax-assisted retirement savings programs. In particular, the IIAC says it would have liked to see the eligible age for RRSP accounts extended beyond age 71, as well as changes to permit payroll tax deductions for contributions to Group RRSPs.
"While most Canadians are on track in saving for retirement, impediments such as falling coverage of workplace pensions can be most effectively addressed through changes to the existing tax-assisted retirement programs," writes IIAC president and CEO Ian Russell.