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“It’s ironic I can finance one of the big companies out there but not one of my good friends who I know has (an idea) that will probably be a success. I’m willing to take the risk but not allowed to do that within the TFSA,” said Chassin.

There’s nothing to stop Canadians from investing in start-ups or small businesses but any earnings would be taxable which the MEI paper places at a disadvantage to investments in TFSA which are never taxable. The group says 84.3 per cent of the heads of start-up enterprises rely on personal financing, either their own or personal loans. Only 17.3 per cent receive financing from friends or relatives.

Small businesses with less than 100 employees account for 70 per cent of all jobs in the private sector, MEI points out.

One of the issues Canada Revenue Agency might have with these type of investments would be pricing which gets tricky because of a lack of liquidity. The MEI says the government could follow the same guidelines applied for family business transfers to produce a fair market value.

“There is potential for someone making a lot of money within his TFSA and this potential exists right now. The reason it exists is to foster a savings culture. The whole idea is to shelter your gains from taxation. It’s good because it encourages people to save,” says Chassin, adding the advantage just needs to be extended to small business.