News Release

SIMA calls for further changes to proposed QI regime

December 17, 2025 (Toronto) — The Securities and Investment Management Association (SIMA) has commented on the Department of Finance Canada’s (Finance) proposal to repeal the registered-investment (RI) regime and to amend the definition of “qualified investment” (QI). The government’s proposal was laid out in the 2025 federal budget.
The proposed legislation would replace the existing RI regime with new categories of QI, designed to streamline compliance and support small business investment. These new categories include units of a trust that:

• is governed by National Instrument 81‑102, which regulates mutual funds and non‑redeemable investment funds
• qualifies as an investment fund under the Income Tax Act (ITA) and is managed by a registered investment fund manager

SIMA has made two submissions to address issues related to the definition of “investment fund” under the ITA, and QI‑specific issues.

“We commend Finance for its efforts to modernize the QI rules to improve the registered plans regime,” said Andy Mitchell, President and CEO, SIMA. “While we are pleased that the proposed changes reflect many of the recommendations in our previous submission, we urge the government to consider additional amendments to clarify the new regime and provide more predictability and operational clarity for industry participants.”

SIMA’s key recommendations:

• Establish a streamlined definition of “investment fund,” applying conditions at relevant measurement periods tailored to each regime (loss restriction event (LRE), alternative minimum tax (AMT), QI)
• Remove the “at all times” requirements from the “investment fund” definition for purposes of the QI regime
• Amend specific elements of the current “investment fund” definition, including rules on year of creation, public distribution, continuous compliance, and the concentration test
• Address broader AMT exemption issues by clarifying permissible beneficiaries, allowing corrective measures for inadvertent breaches, and removing the ambiguous “irrevocable” requirement
• Expand the QI category to include other forms of investment entities, such as limited partnerships and corporations
• Provide a safe-harbour rule if the trust complied with the conditions in the “investment fund” definition, either in the current calendar year or the previous calendar year
• Provide technical notes that give assurance that a fund that has resolved to wind up its operations will not be outside QI eligibility
• Provide transitional relief to prevent penalty taxes for trusts meeting the new QI categories during the transition period (Nov. 4, 2025, to Dec. 31, 2026)
• Extend RI benefits to the new QI categories

About SIMA

The Securities and Investment Management Association empowers Canada’s investment industry. The association is the leading voice for the securities and investment management industry, which oversees approximately $4 trillion in assets for over 20 million investors and the Canadian capital markets. Our members—including investment fund managers, investment and mutual fund dealers, capital markets participants, and professional service providers—are committed to creating a resilient, innovative investment sector that fuels long-term economic growth and creates opportunities for all Canadians.

For more information

Christine Harminc
Director, Communications and Public Affairs
charminc@sima-amvi.ca
416-309-2313