TORONTO, Jan. 20, 2015 /CNW/ - The Investment Funds Institute of Toronto (IFIC) has submitted comments to the Senate Standing Committee on Legal and Constitutional Affairs reiterating the industry's call for amendments to Bill C-377 – An Act to amend the Income Tax Act (Requirements for Labour Organizations (the bill).
At issue is the bill's overbroad definition of "labour trust", which inadvertently creates a reporting requirement for all retail mutual funds (and other public trusts), imposing a costly and unnecessary administrative burden – one that ultimately will be borne by all mutual fund security holders.
The bill's stated intention is to require public disclosure of financial information of labour organizations; however, the bill (s. 149.01) defines "labour trust" to include "a trust or fund… maintained in whole or in part for the benefit of a labour organization, its members or the persons it represents." IFIC argues that, applying a plain interpretation, this definition captures as a "labour trust" – and therefore applies the bill's full reporting obligations to – any trust, or investment fund structured as a trust, that is offered for sale to the public if that trust has so much as one security holder or beneficiary who is a member of a labour organization.
"Bill C-377's current language will have significant and costly unintended consequences for Canada's investment funds industry, to the detriment of the millions of Canadians who own mutual funds," said Joanne De Laurentiis, president and CEO of IFIC. "An individual's personal investment in a public mutual fund is extremely remote from the activities of the union of which the person may happen to be a member. We doubt that reporting on the personal investment or savings activities of individual labour union members was the intention of the drafters or promoters of the bill," said De Laurentiis.
Over the last two years, IFIC and other commentators, including the Canadian Life and Health Insurance Association, have raised these concerns repeatedly in writing and in person with the House of Commons, the Senate Committee on Banking, Trade and Commerce, and staff in the offices of the ministers of finance and revenue. The associations have proposed a simple revision to the definition of 'labour trust" that would eliminate the bill's unintended consequences without changing, in any substantive way, the government policy the bill seeks to fulfil. Specifically, we propose eliminating the five underlined words in the definition: "a trust or fund… wholly maintained in whole or in part for the benefit of a labour organization, its members or the persons it represents".
"Although the consequences we have identified have been widely acknowledged as unintended, the problematic language is yet to be addressed, said De Laurentiis. "We urge the Senate Standing Committee on Legal and Constitutional Affairs to recognize the potential harm inherent in these few words and to adopt our amendment when the bill is reported back to the House of Commons."
The IFIC submission can be viewed here.
The Investment Funds Institute of Canada is the voice of Canada's investment funds industry. IFIC brings together 150 organizations, including fund managers, distributors and industry service organizations, to foster a strong, stable investment sector where investors can realize their financial goals. IFIC is proud to have served Canada's mutual funds industry and its investors for more than 50 years.
SOURCE The Investment Funds Institute of Canada
For further information: Sara Clodman, [email protected], 416-309-2317