The Toronto Financial Services Alliance is calling on Ottawa to cut dividend taxes and level the playing field with income trusts.

The TFSA submitted its recommendations to the Finance Department on Friday in response to the
department’s call for submissions on the tax treatment of business income trusts and other flow-through entities (FTEs).

In the submission, the TFSA warned that any attempt to change the $140 billion trust sector could “heighten risk” for anyone considering an investment in Canada.

“You want investors to have confidence in the ability of your regulatory structure, and confidence that government isn’t going to change the rules mid-stream,” said Janet Ecker, executive director of the TFSA.

“This isn’t just about big investors or folks on Bay Street getting their year-end bonuses. This is about one million small investors out there” who are relying on trusts to fund their retirement.

Rather than introducing a new tax on FTEs, the TFSA recommends that the federal government “improve the tax neutrality among different forms of financing and organization by equalizing the tax treatment between trusts and corporations by increasing the dividend tax credit.”

The TFSA works closely with industry, affiliate services and government to enhance and promote the competitiveness of Toronto as a premier North American financial centre.