Example – RRSPs and the Labour-sponsored funds tax credit


I put labour-sponsored investment funds (LSIFs) into my RRSP and got a labour-sponsored funds tax credit. The funds have matured and have been used to purchase another LSIF this year. Will I be able to claim a labour-sponsored funds tax credit again? Where, on the return, do I make the claim?

Once the LSIF shares have been held in your RRSP for the minimum required holding period and they are redeemed by your RRSP trustee in order to make another purchase of approved LSIF shares for which your RRSP will be the first registered holder, you may again be eligible to claim a labour-sponsored funds tax credit. Follow the instructions for lines 41300 and 41400 under "Completing your tax return".

Note that you cannot claim an RRSP deduction for such a transaction as it is not a new RRSP contribution. It is only a reinvestment of RRSP funds.

The minimum holding period for approved LSIF shares acquired after March 5, 1996, is generally 8 years after the day the shares were issued. Redeeming the LSIF shares before the expiry of the minimum holding period will generally result in the recovery of the labour-sponsored funds tax credits for those shares.

LSIFs in the province of Quebec are subject to other provincial rules and requirements regarding the minimum holding period.

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