Bringing you live news and features since 2013
Bringing you news, views and analysis since 2013

12363

IFIC proposes excluding Canadian funds from PFIC rules

RELATED TOPICS​

The Investment Funds Institute of Canada (IFIC) has made a submission to members of the US Congress to propose that Canadian mutual funds be excluded from the Passive Foreign Investment Company (PFIC) rules.

 
Under PFIC, distributions to and redemptions of Canadian mutual funds by US persons are taxed as ordinary income, even when the investor has earned capital gains. 
 
“There is sufficient similarity between the treatment (for income tax purposes) of mutual funds in Canada and the US to support the exclusion of Canadian mutual funds from the PFIC rules,” says Joanne De Laurentiis (pictured), IFIC’s president and chief executive.
 
The impact of these rules on the estimated one million American citizens residing in Canada include a higher level of tax, potentially punitive tax charges, and significant compliance costs.
 
The PFIC rules are not targeted at companies whose income and assets are generally active in nature.
 
“None of these consequences would apply to Americans resident in Canada who purchase the securities of the active companies underlying the funds,” De Laurentiis says. “This creates an uneven playing field between products, and is in direct contradiction to the position of the Organisation for Economic Co-operation and Development (OECD), which has adopted the position that an investment in a collective investment vehicle should not result in a different incidence of tax than if the securities were owned directly.”
 
In its submission, IFIC notes that Canada is not an “offshore tax haven” for Americans who reside there, and that the mutual fund products are similar on both sides of the border.
 
IFIC’s submission has been forwarded to two Congressional committees: the Financial Services Working Group Committee on Ways & Means and the International Tax Reform Working Group.

Latest News

RQI Investors, an Australian-based active quantitative equities manager and part of the First Sentier Investors..
UK-based wealth management companies London & Capital and Waverton have announced that they have reached..
Figment Europe, a provider of institutional staking infrastructure, writes that it is solidifying its presence..

Related Articles

British pound coin
Fixed income’s return to favour following widespread interest rate rises has led to investors overcrowding sterling investment grade credit, delegates at the Pensions and Lifetime Savings Association investment conference have heard...
Fixed income’s return to favour following widespread interest rate rises has led to investors overcrowding sterling investment grade credit, delegates..
Sustainable Economy Top Panel
Europe is driving the growth in sustainable investment with global assets under management in ESG-labelled funds passing USD2.8 trillion...
Europe is driving the growth in sustainable investment with global assets under management in ESG-labelled funds passing USD2.8 trillion...
Pension funds
UK institutional investors are questioning the value of investing in private markets despite pressure from government to finance the country’s net zero and levelling up ambitions...
UK institutional investors are questioning the value of investing in private markets despite pressure from government to finance the country’s..
Juan Nozal, Mapfre Asset Management
Juan Nozal, Fixed Income Portfolio Manager at MAPFRE Asset Management, talks about the outlook for fixed income assets over 2024, in what he predicts will be an outstanding year for this asset class...
Juan Nozal, Fixed Income Portfolio Manager at MAPFRE Asset Management, talks about the outlook for fixed income assets over 2024,..
Subscribe to the Institutional Asset Manager newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by