The Toronto Financial Services Alliance (TFSA) a public private
partnership of federal, provincial and municipal governments and
leading financial institutions and entities, has made submissions
to the federal and provincial governments as part of the annual
pre-budget consultation process. In each submission, TFSA has
called for changes to Canadian laws and regulations to facilitate
Islamic finance in Canada.
The TFSA notes, that the Islamic financing market represents a
tremendous opportunity for Canada's financial sector with
Islamic banking assets reaching US$1.1 trillion in 2012, a
significant jump of 33% from their 2010 level. Canada is well
positioned to attract additional investment from countries where
Islamic finance is becoming an important alternative to
conventional finance, with Toronto well positioned to become the
North American centre for Islamic finance.
Asian economies such as Malaysia and Indonesia and the countries
of the Gulf Co-Operation Council (Bahrain, Kuwait, Oman, Qatar,
Saudi Arabia, and the UAE) are at the forefront of the development
of Islamic finance. Many of these jurisdictions are of strategic
importance to Canada from a trade and investment standpoint, and a
willingness to accommodate structures that are widely utilized in
Islamic finance will facilitate attracting additional trade and
investment opportunities for Canada and the Canadian financial
The TFSA has created an Islamic Finance Working Group (IFWG) and
the IFWG has done some of the initial policy work to identify
issues and options to level the playing field with conventional
finance. There are a number of proposed changes to federal and
provincial legislation that would help level the playing field,
thus allowing governments and private sector participants to take
full advantage of Islamic finance in Canada.
Most recently, KPMG has completed a report outlining changes to
be made to Canadian federal and provincial tax regimes to
facilitate Islamic finance in Canada.
TFSA has recommended that the Canadian federal government should
review the income tax treatment of Islamic finance so as to
(i) Islamic deposit products; (ii) Islamic non-mortgage and
mortgage lending transactions; and (iii) Islamic bond structures.
In addition TFSA has asked the federal government to review the
GST/HST treatment of Islamic finance so as to clarify: (i) Islamic
deposit products (ii) Islamic non-mortgage and mortgage lending
transactions (iii) Islamic bonds; and (iv) Islamic insurance.
In its submissions to the Government of Ontario TFSA has asked
the government to review possible amendments to the Financial
Administration Act; Public Lands Act; Proceedings Against the Crown
Act; and Land Transfer Act. In addition the TFSA has asked the
Government of Ontario to work with the federal government on
potential complementary changes to income tax and GST/HST
The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).