Submissions to Government

PMAC Submission to Department of Finance on draft tax proposals

Trust reporting requirement exemption should include pooled funds

The lack of MFT status for pooled funds results in several unfair consequences compared to mutual funds and segregated funds. This inequity includes the impacts of the proposed trust beneficial ownership reporting requirements proposed in previous budgets and now being implemented. We ask that pooled funds be excluded from these requirements, similar to MFTs and segregated funds. We believe that pooled funds may have been unintentionally omitted from the list of excluded funds, as we see no public policy benefit to requiring beneficial ownership reporting for pooled funds but not for MFTs and segregated funds.


  1. Exclude pooled funds from the trust beneficiary reporting requirements. There is no stated policy reason that pooled funds should not be excluded from the beneficial owner reporting requirements on the same basis as MFTs and segregated funds. The requirements were not intended to impact commercial investment fund products, and these entities do not pose a risk of tax avoidance, tax evasion, money laundering or other criminal activities cited as the policy purposes for the proposals. The costs and burden of the reporting requirements are significant.
  2. In the alternative, exempt pooled funds that are registered investments, and/or consist substantially of non-taxable entities, from the reporting requirements. These entities are exempt from tax and therefore do not present a risk of tax avoidance or evasion. Many such entities already provide significant information regarding their beneficiaries. In the case of funds established by employers to provide benefits to employees, the trusts may have thousands of beneficiaries. Collecting and reporting this information represents a tremendous burden for these entities and there is no clear policy reason for requiring the enhanced disclosure.
  3. Exempt Non-Qualifying Split Funds from the beneficial ownership reporting requirements for those units that are listed on a stock exchange. It will not be possible for a Non-Qualifying Split Fund to determine the beneficial ownership of its units that are listed on a designated stock exchange. For units of trusts traded on stock exchanges, the fund manager does not have visibility into the ultimate beneficial holders of the trust. These funds should be exempted from the reporting requirements.

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