Fiscal and Financial Planning Guide 2024-2025

Workers > Worker’s Fund, FTQ, CSN

History

Labour-sponsored funds were created in the wake of the economic crisis of the early 1980s, to support Quebec businesses and prevent major job losses.

The Fonds de solidarité FTQ was first created in 1983, and the Fondaction CSN several years later, in 1996.

Tax credits

The purchase of shares in labour-sponsored funds entitles the buyer to a 30% tax credit, i.e. 15% at the federal level and 15% in Québec. The maximum annual limit for the purchase of fund shares is $5,000, giving a maximum credit of $1,500.

In addition, shares are RRSP-eligible, which can represent total tax savings of between 58% to 83%, as illustrated in the table below

High-income individuals

The Quebec government has announced that, starting in 2027, individuals with a net income of over $130,000 in 2025 (corresponding to the income at which the maximum tax rate applies) will no longer be entitled to the 15% Quebec tax credit associated with labour-sponsored funds. Income will be determined on the basis of the tax deduction for the 2nd preceding year, i.e. 2025.

Long-term investment

Generally speaking, shares have be held until retirement although there are several exceptions where shares can be sold before retirement.

For example :

  • Purchase of a first home under the Home Buyers’ Plan (HBP);
  • Returning to full-time studies;
  • Leaving Canada;
  • Illness;
  • Death.

Extended maximum holding period

The minimum holding period to qualify for the credit is gradually extended from 2 to 5 years for shares acquired from June 1, 2024, 2025 and 2026.

To invest in Labor-sponsored funds or not?

Given the obligation to hold shares until retirement, it may be more prudent to wait until you’re within around 10 years of retirement before acquiring shares in the funds, in order to limit the risks associated with prolonged holding.

Shares are eligible for the Home Buyers’ Plan (HBP).

Shares can be sold and amounts withdrawn from RRSPs (maximum $35,000) when purchasing a first home. The amount withdrawn from the RRSP must be repaid to the RRSP over a 15-year period, and used to acquire new Labour Sponsored Funds shares. This could be of interest to young adults saving for their first home.

People who have difficulty saving and are unable to contribute to a traditional RRSP could consider Labour Sponsored Funds shares, which, given the larger deductions, could enable them to contribute to an RRSP while respecting their ability to save.

Lump-sum contributions and deductions

  • FTQ Fund

Since the pandemic, the FTQ Fund has limited lump-sum contributions (max $5,000) and monthly deposits from bank accounts. However, people who were already making monthly contributions can continue to do so. For new contributions, the FTQ Fund periodically holds a draw for random allocation. Unfortunately, the most recent draw has ended, since registration was required for the period of December 16, 2024 to January 24, 2025. Interested parties should check the FTQ Fund website from time to time for future draw periods.

  • Fondaction CSN

Lump-sum contributions or monthly transfers are still allowed by Fondaction.

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