Labour Sponsored Investment Funds (LSIFs)
LSIFs were established to promote venture capital investing in Canada with the aim of ensuring that our country continues to generate new jobs and economic expansion. They provide the average investor with the opportunity to get in on the ground floor of high potential small and medium-sized companies, including those in the information technology and life sciences sectors.
To encourage investors to put their money into qualifying LSIFs, the federal government and many provincial governments offer investors generous tax incentives. In December 2007 the Government of Ontario increased the maximum annual qualifying investment to $7,500 from $5,000. Thus, depending on the type of venture capital fund, Ontario investors will receive a
10% or 15% provincial tax credit (up to $750 or $1,125) in 2010 on the first $7,500 invested each
year and will fall to 5% or 10% (up to $375 or $750) in 2011 and will be eliminated
in 2012. In addition, the federal government provides a tax credit of $750 on the first $5,000 invested.
These credits are over and above any RRSP deductions. So, LSIFs can be well suited for non-registered investors, including individuals who are receiving income from a RRIF.
LSIFs, however, are not suited for everyone. First, the risks associated with venture capital investing are high. (Correspondingly, under the right conditions, the rewards can also be high.) Also, they are designed only for investors with a long-term horizon, including the fact that if one does not hold the LSIF for 8 years, the tax credit must be refunded.
Tradex distributes several LSIFs, with particular emphasis on the following:
One of Canada's largest independent manager of LSIFs in Canada with over $500 million in assets under administration. In 2005, Ottawa based Capital Alliance Ventures Inc. merged with GrowthWorks Canadian Fund.
For more information, visit their website at www.growthworks.ca.
Their funds give investors access to well-diversified portfolios of established companies operating in traditional industries as well as dynamic industries like alternative energy. Visit their website at www.venturelinkfunds.com.
Dynamic Venture Opportunities Fund
As part of the very successful Dynamic mutual funds group, this Fund is able to draw upon the skills and expertise of some of Canada’s top-performing portfolio managers. Learn more by visiting their website at www.dynamic.ca.
For more information on investing in LSIFs through Tradex, please call us at 1-800-567-3863.