On July 15, 2024, the IIAC provided recommendations to the Department of Finance’s in respect of Qualified Investments in Registered Plans. Key recommendations as follows:
- Registered plans should be permitted to loan QIs pursuant to a fully paid securities lending (“FPL”) program, provided that the FPL transaction (i) qualifies as a “securities lending arrangement,” as defined in subsection 260(1) of the Tax Act and (ii) the registered plan is afforded protections, in its capacity as securities lender, that are equivalent or superior to those in rule 4600 of the Investment Dealer and Partially Consolidated (IDPC) Rules.
- In situations where the registered plan issuer took reasonable steps to ensure that the particular asset was a QI at the time the registered plan acquired the asset, the registered plan issuer should not be liable for any of the registered plan’s interest, penalties or taxes from holding a non-QI if either (i) the asset is in actuality a non-QI despite the registered plan issuer’s reasonable steps or (ii) the asset ceases to be a QI, and becomes a non-QI, at any time while it is held by the registered plan.
- The compliance regime for holding shares of small businesses in registered plans should be simplified by:
- Harmonizing the requirements for whether a share of a small business is a QI across all types of registered plans;[1] and
- Obligating the small business corporation to provide registered plan issuers or holders with the fair market value of the small business shares, in order for registered plan issuers to meet their tax compliance obligations.
- Other requests, being:
- Simplifying the list of designated stock exchanges for multi-tiered or multi-segmented exchanges; and
- Classifying all derivatives that trade on a designated stock exchange as QIs.