Changes to Canada Savings Bonds

Yesterday’s post reminded me that I saw that there were some changes made to the Canada Savings Bonds Program which will take effect later this year.

1. Sales period shortened by two-thirds: Since 1998, CSBs have been available for purchase between October of a certain year and April of the following year.

From October of 2010, however, the time will be shortened to two months – from October to December.

As for why, the information page states that 95% of bonds are purchased during these two months.

2. No new Government sponsored RSPs or RIFs: Up until now, if you selected the RSP option when buying a CSB, it would be RRSP eligible and held in a Government sponsored account. From this year, however, this option will no longer be available.

This will not affect investors who already have a Government sponsored RSP or RIF account. Those accounts will continue to exist. It is only new customers who will be affected.

As for how to keep your interest tax deferrable, CSBs will still be able to be held within a self-directed RRSP plan.

Both changes have been made in order to “help streamline the Program and ensure its long-term sustainability,” which means… save money.

If the overwhelming majority of buyers buy between October and December, and if there is a lack of interest in the Government sponsored plan (as stated on the FAQ page), then I think these changes are probably for the best, and will help out the program.

I stumbled upon this information while looking for something completely different, but it was the first I had read about it. This is one of the setbacks of living half a globe away – I don’t have the opportunity to see posters in the bank or commercials on TV.

It would be interesting to hear from any readers in Canada if this was well advertised.

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