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Canadian Tax Deferred Savings Plans and the Foreign Property Rule

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Abstract

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.

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  • David Burgess & Joel Fried, 1998. "Canadian Tax Deferred Savings Plans and the Foreign Property Rule," University of Western Ontario, Departmental Research Report Series 9801, University of Western Ontario, Department of Economics.
    • Handle: RePEc:uwo:uwowop:9801
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    2. David Burgess & Joel Fried, 1999. "Canadian Retirement Savings Plans and the Foreign Property Rule," Canadian Public Policy, University of Toronto Press, vol. 25(3), pages 395-416, September.

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