Labour Fund Tax Credit: the two Quebec funds made a reasonable offer

MONTREAL, Oct. 23, 2013 /CNW Telbec/ - The Fonds de solidarité FTQ and Fondaction CSN were surprised and disappointed to learn a few days ago that the federal government has not changed its mind about the labour fund tax credit phase-out announced in its March Budget despite the representations and proposals put forward.

In the last few weeks, following several meetings with public servants, the two Quebec funds presented a reasonable offer which met with all of the federal government's concerns. This offer included a closer partnership in which the funds would make a significant contribution to the success of Ottawa's new Venture Capital Action Plan.

Mindful of the fact that Ottawa is facing budget constraints, the labour funds made a reasonable proposal along the following lines:

  • Decrease the federal tax cost by a third (approximately $300 million over 10 years) by namely limiting the issue of new shares;
  • The two labour funds would invest $2 in venture capital for each tax credit dollar throughout the duration of the Venture Capital Action Plan:
    • $550 million in Québec private funds that invest in Canada;
    • $400 million in private funds outside Québec, including $120 million in the two national funds of funds called for in the Venture Capital Action Plan;
    • $1.05 billion invested directly in companies in addition to the funds' investments in the Venture Capital Action Plan during its duration.

With this proposal, Québec's labour funds would invest a total of $2 billion in venture capital over the term of the federal Action Plan, over and above the $4 billion invested by the funds in growth capital.

Stakeholders from all areas expressed their support for maintaining the tax credit during consultations held by the federal government itself.

Although eliminating the federal tax credit will not affect shareholder return or the ability of the funds to honour redemption requests, even in the long run, it will increase the average investor's tax bill by several hundred dollars per year as of 2017. It is important to mention that the federal credit will remain at 15% until March 2nd, 2015 and the Québec credit will not change at all.

Another effect of this measure will be a significant reduction in the amount of venture capital available to Québec SMEs.

As they did in the spring, Québec's labour funds are inviting the business community to join them in opposing the tax credit phase-out during the upcoming parliamentary process.

About the Fonds de solidarité FTQ

Created in 1983, the Fonds de solidarité FTQ has been driving the Québec economy for 30 years. With net assets of $9.3 billion as at May 31, 2013, the Fonds is a development capital fund that channels the savings of Quebecers into investments in all sectors of the economy to help create and maintain jobs and further Québec's development. The Fonds is a partner, either directly or through its network members, in 2,395 companies. With 615,664 shareholders-savers, the Fonds helps create, maintain or protect 170,915 jobs. For more information, visit www.FondsFTQ.com.

About Fondaction CSN

Fondaction invests in Québec SMEs in order to help maintain and create jobs in Québec, within a context of sustainable development. It manages $1.03 billion in assets derived from retirement savings collected from more than 120,000 shareholders. It is the financial partner of some one hundred companies and of partner and specialized funds operating in all industry sectors and in the social economy www.fondaction.com.

SOURCE: Fonds de solidarité FTQ

For further information:

for media representatives only:

Patrick McQuilken
Senior Advisor, Media Relations and Communications
Fonds de solidarité FTQ
Phone: 514 850-4835
Mobile: 514 703-5587
Email: pmcquilken@fondsftq.com

Suzanne La Ferrière
Communications
Fondaction CSN
Phone: 514 525-7041
Mobile: 514 704-2944
Email: suzanne.laferriere@fondaction.com


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