A law targeting unions will create unnecessary paperwork and higher fees for mutual fund clients, says IFIC.
IFIC has asked the Senate Standing Committee on Legal and Constitutional Affairs to amend Bill C-377 – An Act to amend the Income Tax Act (Requirements for Labour Organizations).
The bill has already passed the House of Commons. Its sponsor, Conservative MP Russ Heibert, says the legislation is meant to make labour union finances more transparent.
IFIC says the bill’s definition of “labour trust” is too broad, and inadvertently creates a reporting requirement for retail mutual funds. The definition includes “a trust or fund… maintained in whole or in part for the benefit of a labour organization, its members or the persons it represents.”
IFIC told the Senate that this definition imposes an unnecessary administrative burden on mutual funds, and ultimately, fund clients will pay more.
Over the last two years, IFIC and other groups, including the Canadian Life and Health Insurance Association, have raised these concerns repeatedly in writing and in person with the House of Commons, the Senate, and staff in the offices of the ministers of finance and revenue.
The associations say eliminating the five underlined words in the definition: “a trust or fund… wholly maintained in whole or in part for the benefit of a labour organization, its members or the persons it represents” would solve the problem.
“Although the consequences we have identified have been widely acknowledged as unintended, the problematic language is yet to be addressed,” says Joanne De Laurentiis, president and CEO of IFIC.
The IFIC submission can be viewed here.