The investment industry is seeking more details from the Canada Revenue Agency and the Department of Finance on the proposed tax-free savings account for first-time home buyers introduced in the federal budget this year.
The federal government has not yet published any draft legislation for the new savings program, known as a first home savings account, or FHSA. But it is expected to become available some time in 2023 – leaving the investment community with a “pretty aggressive timeline” to develop a product they know very little about operationally, said Robert Offen, manager of specialized services at AGF Investments Inc.
Mr. Offen, who was speaking at the annual Investment Funds Institute of Canada (IFIC) conference in Toronto, said IFIC – which represents more than 150 investment companies – first met with the CRA and the Finance Department immediately after the budget was released in April.
After that meeting, the group – along with the Canadian Bankers Association, the Canadian Life and Health Insurance Association Inc. and the Investment Industry Association of Canada – sent 11 pages of questions to the government.
The questions sought to clarify the requirements for eligibility, qualified withdrawals, plan termination, tax reporting and the filing process. They also requested information on the process around overcontribution, what happens in the event of the death of the holder and beneficiaries or if a holder becomes a non-resident, as well as the day-to-day administration of the new program.
Mr. Offen said draft legislation is expected by the end of July, followed by a 60-day period for industry comment. A second draft will be submitted around the end of October, which means royal assent would most likely not occur until the end of December.
“If we are looking to launch in 2023, and do the first filing by 2024, our timeline is pretty aggressive,” Mr. Offen told an in-person and virtual audience Monday.
When asked whether the group would meet again with the Finance Department, he confirmed that a second consultation will occur in the “second half of the year,” when the group knows “a bit more” about the product they have to build.
As outlined in the budget, the FHSA would allow any Canadian 18 or older to save as much as $40,000 – with an annual contribution limit of $8,000 – for their first home purchase. The new account is expected to combine the two major tax advantages of registered retirement savings plans and tax-free savings accounts. Similar to an RRSP, deposits would be tax deductible, while eligible withdrawals would be tax-free, as with a TFSA. Any investment growth would also be tax-free.
For investors – and potential home buyers – the accounts will provide another savings tool to help cope with a booming real estate market that has pushed out some first-time buyers in certain regions.
But for the investment community – particularly asset managers who will have to develop the product – the combination of TFSA and RRSP accounts adds layers of complexity to the process operationally, Mr. Offen said, and that needs to be clarified before any financial company can launch proprietary products.
During a panel discussion at Monday’s conference, IFIC senior policy adviser for taxation Josée Baillargeon said that both the CRA and the Finance Department have been open to talks with the investment community, and the associations are “hopeful” their list of questions will ensure that the next consultation will produce a lot more information.
“At the moment there is just very limited information … only 621 words, to be exact, that was written in the tax measure to explain this,” Ms. Baillargeon said. “There’s a lot more unknown than known at this point.”
With a file from Erica Alini
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TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
