Labour Sponsored Investment Funds (LSIFs)
Retail venture capital funds or labour sponsored investment funds offer investors long-term capital appreciation PLUS up to 35% is available in tax credits.
Investors in LSIFs receive 30% in tax credits on the first $5,000 invested each year, in addition to their RRSP deduction if purchased inside an RRSP. The Federal and Provincial* governments each offer up to $750 in tax credits, for combined total of $1,500 in tax savings each and every year. A $5,000 investment could cost as little as $1,180 for an investor in the highest tax bracket (46.41%).
*Note: Ontario government offers 15% on the first $7,500 invested each year
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Tax Tip: An investment in an LSIF can provide you with up to $1,875 in tax credits.
Important: The phase-out period for the Labour Sponsored Investment Fund (LSIF) Tax Credit has been extended by one year to the end of 2011 (from 2010). The government proposes to extend the phase-out period by:
- Maintain the 15 percent provincial tax credit rate until the end of 2009 tax season
- Lowering the rate to 10 percent for 2010 tax season
- Lowering the rate to five percent for 2011 tax season
- Eliminating the credit for tax years after 2011 tax season
About Venture Capital
Venture capital historically outperforms almost every other major asset class available to investors over the long run. If your investment objective is long-term capital appreciation, then consider a labour sponsored investment fund. Adding LSIF's to your portfolio offers long-term return potential through venture capital investing, an asset class which was previously only available to sophisticated institutional investors and the very wealthy.