Finance Minister Ralph Goodale may suspend a controversial budget provision that restricts investments in income trusts by pension funds, according to reports published today.

The Globe and Mail said it has learned from a number of sources that the move could come early next week, prior to a widely anticipated federal election call. The suspension would allow the government to reconsider its position, while dampening protests by large pension funds and their members during the election campaign.

The provision, announced in the March 23 budget, prohibited pension funds from investing more than 1% of their assets in business trusts and limited their ownership to 5% of any single trust.

The restrictions did not apply to real estate investment trusts and resource royalty trusts.

The government took the action because it feared a substantial loss of revenue if pension funds became heavily involved in income trusts, which don’t pay corporate taxes.

It immediately sparked complaints by pension funds that they were being shut out of a growing market.

The funds have mounted a strong lobby to persuade Goodale to reconsider the measure.