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ARTICLE · 25 MARCH 2004

2004 Budget Proposals Relating To Income Funds

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The 2004 federal Budget, announced on March 23, 2004, contains several tax proposals that are relevant to Canadian income funds and their pension fund and non-resident investors. A general summary of these proposals is set out in this article.

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The 2004 federal Budget, announced on March 23, 2004, contains several tax proposals that are relevant to Canadian income funds and their pension fund and non-resident investors. A general summary of these proposals is set out below.

Limitations on Pension Fund Ownership

The government expressed the concern that unlimited participation of pension funds in the business income trust market could have a significant impact on the market and government revenues because of their tax-exempt status and their influence in Canadian capital markets. In response to this concern, the Budget proposes two measures restricting investment by pension funds in business income trusts.

Scope of Limitations

The proposed limitations apply to registered pension plan trusts, registered pension plan corporations, tax-exempt investment corporations and the Canada Pension Plan Investment Board. The proposals do not apply to RRSPs, other tax-exempt investors or funds of funds. As discussed below, the limits

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