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
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
