IIAC Submits Wish List to OttawaBy Andrew Rickard | August 05 2015 10:43AM
The Investment Industry Association of Canada (IIAC) says the federal government needs to make it easier for new and emerging businesses to raise capital, and is calling for legislation that will offer a tax break to those who invest in small business shares. The association also wants to see the annual maximum for Registered Retirement Savings Plans (RRSPs) increased and the minimum withdrawal requirements for Registered Retirement Income Funds (RRIFs) eliminated.
In its submission to the House of Commons Standing Committee on Finance's pre-budget consultations, the IIAC notes that the Canadian economic and financial environment remains difficult. "Continued weak global economic conditions and depressed energy prices have placed a stranglehold on economic growth," reads the document. "Energy sector investment and exports, even with a lower Canadian dollar, cannot be relied upon to drive economic expansion."
As a result, the IIAC is asking the government to introduce measures that would allow for the deferral of income tax on capital gains when the proceeds are reinvested in small business shares within a six-month period. It also wants to have a tax relief system similar to the British Enterprise Investment Scheme and Seed Enterprise Investment Scheme to spur investment in startups.
In addition, the IIAC has recommended changes to current federal tax-assisted savings vehicles; the government should increase annual RRSP contribution limits, do away with the mandatory minimum yearly drawdowns for RRIFs, and exempt employers’ and employees’ contributions to Group RRSPs from payroll tax.
"Yes, there is unused RRSP contribution room amongst Canadians overall, but individuals closer to retirement are most likely maximizing their RRSP contributions and could benefit from increased limits," reads the IIAC's submission. "Strengthening the voluntary component of Canada’s retirement income system would also enhance Canada’s ability to attract and retain the best and brightest people. While budgetary revenue will be lower, it is important to recognize that this is largely a deferral."