Labour Sponsored Funds
Labour sponsored venture capital corporation funds operate much like mutual funds. They are government approved corporations designed to encourage investment into private, small and medium sized businesses in Canada. Because labour funds invest in emerging, young private companies in Canada, investment growth and risk can be higher than with other equity investments.
Labour funds offer up to a 30% tax credit (15% federal plus 15% provincial) on the amount invested to a maximum investment of $5,000. Labour funds are RRSP eligible. A $5,000 investment in a labour fund inside an RRSP can add up to $15,000 of additional foreign content room for that RRSP
This chart shows the after-tax cost of investing in a labour sponsored fund outside and inside an RRSP. A 5,000 investment outside an RRSP will cost you $3,250 after taxes, but only $930 inside an RRSP if you are in the 46.40% tax bracket.
