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I practice in the investment funds area and investment funds use a lot of
derivative transactions to get exposure to their investments
and the
budget indicates that they are closing down certain kinds of
transactions that were
and are now available to investment funds to use.
Many investment funds use a structure,
a transaction to get exposure to
assets that they might not otherwise be able to.
One of the benefits of the structure was that you could get capital
gains treatment for
your investment
and as a result of the budget proposal, that treatment is in
jeopardy and likely will now be treated on income account for transactions going
Forward.
The budget introduced a measure
that would
curtail the ability of investment funds to use a certain type of a
strategy to access some asset classes
as a result I think many investment managers in the future will be
constrained in how they can offer those asset classes to investors
and that's how investors, or one of the ways in which investors, will be
impacted by the budget.
Many existing funds will not be affected by the budget proposal. They will be
able to continue to use
their investment contract
to get the exposure to the asset that they now get exposure to.
And while it won't continue forever, there is a sunset on depending on the
term of the contract those benefits aren't immediately taken away by
the budget.
We're telling our clients to assess the situation, let's take a look
at the budget wording, and the legislation when it comes out, and figure
out the best way to go forward.
It doesn't affect your existing products
and new products, you know we're an innovative bunch, and we will hopefully
find a way to help you meet your needs.