The Investment Funds Institute of Canada (IFIC) has stepped up its campaign against the Canadian government's 20 percent limit on foreign content in registered (retirement) plans, with the goal of getting the restrictions eased by next year. In the meantime, industry players continue to find creative ways around the content quota.

Unwilling to rely on whether lobbying will be successful, fund managers are increasingly taking steps to circumvent the four-year old 20 percent rule. One of the loopholes fund companies have been able to exploit is the quirk in the tax legislation that allows individual funds to hold up to 20 percent in foreign securities, while still being counted in retirement plans, as if they were 100 percent invested in domestic securities. The foreign content law holds that individuals' retirement plans can maintain their tax-deferred status only if they maintain at least 80 percent of their assets in domestic securities.

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