Canadian Tax Deferred Savings Plans and the Foreign Property Rule
This paper argues that the Foreign Property Rule, which limits the foreign content of a Registered Savings plan to no more than 20% of book value, should be removed as quickly as possible. Given the globalization of financial markets, the FPR does not protect what it meant to protect - a pool of savings for investment in Canada. Instead, it distorts the allocation of credit among firms, and forces agents to use more costly instruments - derivatives - to achieve desired foreign risk exposure. Since the FPR lowers the return on registered savings without benefiting any identifiable group, removing it would be an unequivocal gain to Canadians.
|Date of creation:||Feb 1998|
|Date of revision:|
|Contact details of provider:|| Postal: Department of Economics, Reference Centre, Social Science Centre, University of Western Ontario, London, Ontario, Canada N6A 5C2|
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