Ottawa asked to make community investment eligible for RRSPs

Jubilee Fund Inc., a Winnipeg-based community loan fund, is pressing the federal government to change tax regulations to permit Canadians to make community investments with their RRSPs. Assiniboine Credit Union, an administrative partner with the fund, is helping with the request.

Jubilee, launched earlier this year, is one of a growing number of community loan funds that channel socially responsible investment into loans and investments in businesses operated by low-income people or for community development. These funds are mainly community-based and accountable to local organizations. Jubilee is governed by an interfaith coalition.

Jubilee has been in discussion with the Finance Department since it received a letter from the Canada Customs and Revenue Agency (CCRA) earlier this year indicating that investment certificates in the Jubilee Fund would not be RRSP-eligible.

CCRA maintains that only investments in government-guaranteed loan funds are eligible for RRSPs. Most community loan funds are community-based and sponsored by local organizations, and therefore do not have government guarantees. This means that Canadians wishing to invest in such funds have to do so outside of their RRSPs, making them much less attractive than RRSP-eligible alternatives such as mutual funds.

In a letter in May to the tax policy branch of the Finance Department, Jubilee Fund manager Dollphine Oguna said that making community investments RRSP-eligible “would greatly increase participation by taxpayers desiring to make socially responsible investments.”

This is consistent with research undertaken by the Access Riverdale Loan Fund in Toronto which found that investors would be much more willing to invest in a loan fund if the investment was RRSP-eligible.

Oguna also said that RRSP eligibility for community investment “would provide a little counterbalance” to the forthcoming increase in foreign content limits. RRSP regulations are due to be changed permitting Canadians to invest up to 30% of their RRSP in foreign investments, an increase from 20% currently.

Officials of the Jubilee Fund say that Finance Department staff are reviewing the matter and that they are hopeful that the regulations will be changed.

For more information, Russ Rothney, Assiniboine Credit Union, 204-958-8756.

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