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

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IFIC urges Ontario to adopt fairer mutual fund tax regime

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The Investment Funds Institute of Canada has appeared before the Ontario Standing Committee on Finance and Economic Affairs to express its concern at the level of tax on mutual funds.

The mutual fund industry is pressing the federal government to modernise its GST policy to bring it in line with other VAT and GST regimes globally.

“We are here today to express our concern that Ontarians saving for retirement and other purposes are seeing their mutual funds taxed at a four to five times the rate embedded in GICs and other financial products,” said Joanne De Laurentiis (pictured), president and chief executive of IFIC.

“Other countries have recognised the need to treat all financial products the same and we’d like the federal government to change the GST – and HST – accordingly.”

The government’s goal is to harmonise its retail sales tax with the GST – a single federal/provincial harmonised sales tax would help make many Canadian businesses more competitive, free businesses from the costs of having to manage two separate tax systems, and eliminate Ontarians having to pay tax on top of tax.

De Laurentiis added: “Mutual funds provide Canadians with access to portfolio expertise and investments once available only to large institutional clients. As interest rates dropped during the 1990s, Canadians turned to mutual funds seeking higher returns. Mutual funds allowed ordinary Canadians to save small amounts on a regular basis, affordably diversify risk and get the personalised advice that they need to help manage saving for education, a home, a small business and retirement.”

De Laurentiis said the mutual fund industry has had constructive discussions with Ontario Finance Minister Duncan and his officials over the last several months. The minister has agreed to support the industry in its request of the federal government to fix the application of the GST and Harmonised Sales Tax to mutual funds.

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