RRSP Another Victim of Tory Tax Cut

The Conservatives annoncement that it will give wealthy Canadians, stock brokers, and the Bay Street Boys an additional tax cut on capital investments may create a crisis in the RRSP market just before the big push before tax time. Tory tax idea may hit RRSPs

The trusty old RRSP could be rendered obsolete for some investors under a campaign promise by the Conservatives to eliminate taxes on capital gains that are reinvested within six months.

"For people who are actively involved with their investments, committed and focused, there are some real advantages that can be made of this," said David Shymko, a partner at financial advisers Macdonald Shymko & Co. in Vancouver. "You could probably put aside the use of an RRSP."

One group that won't be especially happy is the majority of investors who hold stocks, bonds and mutual funds only in their RRSPs.

"It's actually an amazingly tiny group of well-off Canadians who will capture the lion's share of the benefit," said Jim Stanford, economist at the Canadian Auto Workers union.

Think of this as the Income Trust announcement in reverse. RRSP's are the biggest source of funding for Mutual funds.This could mean that 2005 was the last year that RRSP funded Mutual funds boomed. Mutual funds have banner year as sales, markets soar

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Canada
Federal Election
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Conservatives
RRSP
tax cuts