Budget draws mixed reviews from industry associations

Income trusts capped in a housekeeping budget Staying the course: No surprises in Goodale’s first budget Advisors react to “non-event” budget Budget draws mixed reviews from industry associations Industry insiders analyze return to prudence The federal budget and your financial plan (Client letter) Back to main page Oliver told Advisor.ca that he was also pleased […]

By Sheila Avari | March 18, 2004 | Last updated on March 18, 2004

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Oliver told Advisor.ca that he was also pleased that the government chose to re-evaluate the proposed change to interest deductibility on loans made for investment purposes, pushing the deadline for making a submission to the end of August. “The interest deductibility issue would be huge and obviously it’s a considerable relief that they’re not doing anything about that at this point because that would be big,” said Oliver. “The margin debt is around $8 billion in the country now… the deductibility of which would be jeopardized, and that could have an impact on retail investing, so it’s a very big issue. It isn’t in [Tuesday’s budget] and we’re pleased.”

However, Oliver wasn’t quite as happy with budget measures to restrict pension fund participation in the income trust sector. “The proposed limit on pension plan investing in income trusts could constrain future growth,” noted Oliver. “The pension funds haven’t been investing in that area because of the liability question, but that should soon be cleared up. I guess the federal government has wanted to put a cap on pension fund investing for fiscal reasons.”

While advisors can possibly draw a key lesson for their clients from the government’s prudent approach to responsible spending, including its reinstatement of $1 billion prudence reserve to ensure its books stay balanced, there isn’t much else of note in this year’s budget to discuss with the average client, according to Brooks. “There were some incentives related to education [for lower income families], but that was about it. I think in terms of the advisor sitting down with their client tomorrow, there’s really no [critical] information that he would be passing on in terms of the federal budget.”