Investor issues don’t tend to be priorities in election campaigns because they lack the broad appeal of general tax cuts and new spending programs. And that’s certainly the case in the current federal campaign.

But that doesn’t mean the winning party won’t pay attention to suggestions from financial services and business groups — particularly if they don’t cost a lot — when preparing the next federal budget.

A big concern of several of these groups is the ability of Canadians to generate sufficient income from their assets to live comfortably in retirement. Pre-budget submissions made in August by the Investment Funds Institute of Canada, the Investment Counsel Association of Canada and the Canadian Chamber of Commerce to the federal Finance committee contain nine recommendations that will enhance Canadians’ ability to prepare for retirement.

Those from IFIC and the ICAC are specific to investment and retirement issues. The CCC’s recommendations are broader — it is seeking a reduction in the second-lowest federal tax rate and an increase in the threshold for the top tax bracket and increasing the working income tax benefit. However, the CCC also encourages additional retirement savings.

If the Conservatives win the federal contest, broad tax changes are not likely because the party won’t have much extra money with which to play — not without raising consumption taxes, says David Perry, senior research associate with the Toronto-based Canadian Tax Foundation. And raising taxes is unlikely, as the Tories are trumpeting the fact that they have reduced the GST rate by two percentage points since coming to power in 2006.

Should the Liberals win and implement a carbon tax, the party has promised to return all the money raised by the carbon tax to individuals and businesses through tax cuts and credits.

IFIC’s and the ICAC’s recommendations are generally less costly than broad tax changes. As a result, those recommendations stand a better chance of being adopted, provided the groups can argue their cases strongly and the measures aren’t too difficult to implement.

Implementation complexity is an issue with IFIC’s proposal to end the double taxation of dividends in registered plans. The problem is that individuals who have equities in their RRSPs don’t get the dividend tax credit for those dividends, yet they are taxed on that dividend income when it is withdrawn from their RRSPs or RRIFs.

IFIC suggests a refundable tax credit for dividend income paid into registered plans. It admits that this may be difficult to administer, but IFIC has offered to work closely with the Department of Finance to find a practical solution.

Here’s a look at other proposals:

> Personal Income Taxes. The CCC would like to see a reduction in the second-lowest federal income tax rate — which applies to taxable income between $37,885 and $75,769 — to 21% from 22%. This would ease the tax burden on taxpayers in this bracket.

The CCC also recommends increasing the threshold for the top tax bracket to $200,000 from $123,184, and boosting the working income tax benefit to $750 from $500 for individuals, and to $1,500 from $1,000 for families.

IFIC supports reducing the second-lowest tax rate, says Jamie Golombek, managing director for tax and estate planning with Toronto-based CIBC Private Wealth Management and chairman of IFIC’s taxation working group.

Raising the working income tax benefit would ease the tax burden on low- and middle-income earners and would be popular. All federal parties are in favour of reducing the tax burden on these income groups.

Dale Orr, managing director of Canadian macro services in Toronto with Boston-based Global Insight Inc., also highly recommends lowering the tax rate for the second-lowest bracket. He wouldn’t be surprised to see it in the next budget, and adds that he believes it should be “pretty close to the top of the list” on desirable measures for the next federal government, regardless of party.

Increasing the threshold for the top tax bracket doesn’t have broad appeal, however. While it would be attractive to the Conservatives, high-income voters and companies trying to keep or attract professional staff, it would not be popular with the majority of voters, who already think high-income and rich individuals don’t pay enough taxes. The proposal certainly makes sense from an economic point of view because of the productivity of high-quality professionals.

@page_break@> The 150 Unitholder Rule. The ICAC is focusing on trying to get the number of unitholders required for trusts to qualify as mutual fund trusts reduced to 10 from the current 150.

The issue is that many investment counsellors and portfolio managers use unit trusts or pooled funds that are identical to mutual funds in that they have a trust agreement and must have a trustee, but they do not have 150 unitholders.

The problem is that without 150 unitholders, the unit trusts do not qualify for investment in RRSPs, RRIFs, DPSPs and RESPs without the additional investment restrictions that are imposed on “registered investments.” Nor are such small unit trusts exempt from the alternative minimum tax.

The reason that these trusts don’t have 150 unitholders is that the originators of the trusts want to keep the trusts small to allow for flexibility in trading and to react quickly to market changes.

The result is that some seniors and Canadians saving for retirement are unfairly subject to less favourable tax treatment than other Canadians who invest in similar but larger pooled investment vehicles.

The ICAC also points out that the 150 rule doesn’t take into account the fact that pension plans are counted as one unitholder, even if the plans have as many as 1,000 members.

Katie Walmsley, the ICAC’s president, says the reason for the 150 rule is to make sure there aren’t abuses resulting from related unitholders forming a trust that qualifies as a mutual fund trust. This can be avoided by specifying that the 10 unitholders must be unrelated. Making this change, she adds, would encourage new, smaller entrants into the industry, increase competition and increase overall asset-management efficiency.

> Double Taxation Of Dividends. Double taxation of dividends in registered plans is unfair, Golombek says, because those who choose to put equities into their registered plans don’t get the benefit of the dividend tax credit that other equities investors enjoy. But, he admits, this situation won’t be easy to fix.

> Pension Income-Splitting. IFIC points out that it’s unfair to allow pension income-splitting and access to the pension income tax credit at age 55 for income received from defined-benefit pensions or annuitized defined-contribution plans, but not for withdrawals from other registered retirement plans. IFIC recommends that pension income-splitting and the tax credit be allowed from age 55 for withdrawals from RRIFs, for pension plan assets that have been transferred to locked-in registered plans and for registered plans that have been annuitized.

Perry agrees this recommendation makes sense but doubts it will be done quickly because it doesn’t address enough people’s concerns.

> Defined-Benefit Transfers. IFIC recommends increasing the annuity factors and, by extension, the eligible limits for amounts transferred from DB pension plans to LIRAs or locked-in RRSPs. IFIC points out that these factors have not been adjusted in many years and no longer reflect mortality and real (after inflation) interest rates. IFIC adds that these amounts should be subject to regular updates as interest rates and mortality rates change in the future.

> RRIF Minimum Withdrawals. IFIC recommends eliminating or reducing RRIF minimum withdrawal rules. IFIC points out that with no official retirement age and an aging population that works longer, retires later and lives longer, the withdrawal rules may mean that funds are withdrawn and taxed earlier than is desirable, thereby reducing savings that will be needed later in life.

Golombek also notes that the rules were established in 1992, when interest rates were much higher. At the very least, a reduction in the minimum withdrawal should be made to reflect today’s much lower rates.

Others support this, including the Toronto-based C.D. Howe Institute. It recently recommended complete elimination of these rules. Orr, too, thinks it’s a good idea but doubts it will be implemented in the next federal budget because it could be “a bit expensive.”

> Income-Testing. IFIC recommends eliminating the dividend gross-up amount — 45% of the value of dividends received — from the definition of net income used for means testing for old-age security and guaranteed income supplement benefits. That gross-up can result in OAS and GIS clawbacks not justified by the income seniors receive.

As a result, IFIC’s submission says, its members “have noticed that some seniors try to avoid dividend income,” which may not be the best investment decision.

> Capital Losses In Registered Plans. IFIC recommends that beneficiaries of registered plans be allowed either to claim any capital losses or to allow such losses to be used in a deceased person’s terminal tax return. IE