By Hazel Corcoran
CWCF runs a program called the Common Good Capital Registered Plan Program. Through this program, worker co-ops, other types of co-ops, Community Economic Development funds, and related entities can have qualified shares or bonds held in self-directed registered plans, specifically RRSPs and TFSAs. This is helpful in capitalizing eligible enterprises, for both member and non-member investment, as it enables tax advantages. Co-operatives need to be freer to obtain their capital where they can find it, but there are restrictions on the size and type of entities which can use self-directed registered plans. Among other issues, it is not possible for small worker co-ops to make use of it, i.e., those with fewer than 10 members, although this was previously possible.
CWCF is seeking a more enabling environment from the federal government. To that end, we made a submission on July 15, 2024 to Finance Canada’s recent Consultation on Qualified Investments for Tax-Advantaged Savings Plans. CWCF’s submission is available here. There are very technical issues raised in it regarding the federal Income Tax Act and Regulations. To summarize, one recommendation is that the definition of “Specified Co-operative” be amended to include co-operatives in which members hold less than 90% of all shares. Another is that the prohibited investment rule not apply to worker co-ops; this is the rule whereby people with more than 10% of any class of shares cannot hold their shares in a registered plan. Lastly, we recommend the designated shareholder provision be clearly stated to not apply to members of worker co-operatives.
CWCF would like to acknowledge the organizations which have formally supported the submission:
Tapestry Community Capital, Co-operatives and Mutuals Canada (“CMC”), the Ontario Co-operative Association (“OCA”), and le Réseau de la coopération du travail du Québec (“Réseau COOP”). I thank the following for their support in drafting it: the supporting organizations, the members of CWCF’s Government Relations Committee, the Union Sustainable Development Co-operative, and last but not least, lawyer Brian Iler who had drafted an earlier version of our submission and provided additional comments.
If you wish to explore using our Registered Plans Program as it currently exists, we encourage you to explore the various sub-menus about Common Good Capital on our website, or to contact the Program staff.