Tuesday, May 8, 2007

"Chart A shows clearly"

This is Flaherty’s testimony at the Public Hearings on January 30, 2007:

“Chart A shows clearly this trend in income trust conversions and the path we were all on. As you can see on the chart from '03 to '06 the huge increase in 2006 in the first 10 months only of 2006. This represented a clear and present danger to our tax system and our economic structure. Evidence was mounting that we were running a real risk of turning into an income trust economy, an economy where tax avoidance drove business investment decisions and foreign investors stood to make significant gains at the expense of Canadian taxpayers.”

I have one question, where is Chart B?

“Chart B shows clearly this trend in income trust takeovers and the path we are all on, As you can see on the chart from Oct ‘06 to May ‘07 the huge increase in the first 6 months since Halloween. This represents a clear and present danger to our tax system and our economic structure. Evidence is mounting that we are running a real risk of turning into a foreign private equity economy, an economy where tax avoidance drives business ownership decisions and foreign investors stand to make significant gains at the expense of Canadian taxpayers” (read: $35 billion)

I couldn’t have said it better myself. Chart B is attached for anyone wishing to acknowledge this version of reality. As we all know, Flaherty is better at fear mongering in the name of job security than he is at truth acknowledgement and factual disclosure, therefore this is information not so freely available from the Department of Finance but rather from the private sector which has to cope with flawed government policies.

Announced Acquired Ticker Buyer Value Buyer Info
Jan 15, 2007 Sunrise Senior Living REIT SZR.UN Ventas, Inc. (NYSE: VTR)* 2,280 US based REIT
Nov 6, 2006 Halterm Income Fund HAL.UN Macquarie Infrastructure Partners 173 New York based infrastructure inv firm (US$30B), parent company Aus
Feb 4, 2007 Great Lakes Carbon Income Fund GLC.UN Oxbow Carbon & Minerals Holdings Inc. 786 part of the Oxbow Group, a private energy company based in US (Florida)
Feb 9, 2007 Norcast Income Fund NCF.UN Pala Investment Holdings Ltd 87 UK (Jersey), international alternative investment fund
Feb 1, 2007 Lakeport Brewing Income Fund TFR.UN Labatt Brewing Company Ltd 210 Labatt is owned by InBev (Belgium)
Dec 20, 2006 Calpine Power Income Fund CF.UN Harbinger Capital Partners 880 US (Alabama) Private equity/real estate/distress situations
Feb 14, 2007 Entertainment One Income Fund EOF.UN Marwyn 177 UK based investment firm (PE, MBOs, etc)
Feb 16, 2007 Amtelecom Income Fund AMT.UN Bragg Communications Inc 129 Bragg owns Eastlink, a private telecom competitor based in the Maritimes
Dec 4, 2006 Alexis Nihon REIT AN.UN Homburg Invest Inc. 919 Investment firm with lots of properties (Based in NS, Canada)
Feb 26, 2007 Clean Power Income Fund CLE.UN Macquarie Power Income Fund (MPT.UN) 419 Canada based Income Trust
Mar 18, 2007 Associated Brands Income Fund ABF.UN TorQuest Partners 43 Canada based private equity firm
Apr 1, 2007 KCP Income Fund KCP.UN Caxton-Iseman Capital Inc. 804 New York-based private equity firm
Apr 3, 2007 Gateway Casino Income Fund GCI.UN New World Gaming Partners 886 JV of Publishing and Broadcasting Limited (PBL) and Macquarie (both Australian)
Apr 10, 2007 Liquor Barn Income Fund LBN.UN Liquor Stores Income Fund (LIQ.UN) 158 Competitor, Canada based Income Trust
Apr 16, 2007 VOXCOM Income Fund VOX.UN UE Waterheater Income Fund (UWH.UN) 109 Canada based Income Trust
Apr 16, 2007 UE Waterheater Income Fund UWH.UN Alinda Capital Partners LLC 1,740 US (NY) based private equity firm
Apr 24, 2007 Thunder Energy Trust THY.UN PSPIB/Overlord Financial 406 Public Sector Pension Investment Board (Canadian PP)
Apr 30, 2007 Custom Direct Income Fund CDI.UN EdgeStone Capital Partners 237 Canadian based P/E
May 4, 2007 Canada Cartage TRK.UN Nautic Partners 252 US based Private Equity (group of buyers)


Kephalos said...

Well, boys and girls, can you spot a pattern in the picture below.

Friday, March 30, 2007
CanWest News Service
OTTAWA - Corporate pension fears have increased, with 80 per cent of chief financial officers believing there is a widespread pension crisis, up sharply from 59 per cent two years ago, the Conference Board of Canada reported Thursday.

And 61 per cent of those surveyed felt the pension crunch will be long-lasting, said the report. That's up from 43 per cent in 2005, and just 20 per cent in 2004.
The report is based on the 2006 annual survey by the conference board and corporate consulting firm Watson Wyatt Worldwide.

"The pension crisis -- the result of major funding shortfalls and uncertainty about long-term benefit security -- seems set to persist through 2007 and beyond," it concluded.

Federal tax 'loophole' makes trusts tasty targets
Calgary Herald
Tuesday, May 08, 2007

A loophole in federal trust taxation policies will make Canadian energy trusts plump takeover targets for U.S. hedge funds and private pension plans, industry observers warned Monday.
That's because private trusts and large pensions like the Ontario Teachers won't be subject to a 31.5 per cent tax on distributions when the changes come into effect in 2011.

Although he doesn't expect to see a wholesale takeover of the Canadian energy trust sector before 2011, (John) Brussa (a partner with Calgary oilpatch lawyers Burnet, Duckworth and Palmer) -- who previously prepared tax opinions for companies considering trust conversions -- said the mould has been set with Thunder Energy Trust.

In April, Thunder was taken over by a consortium that included Overlord Financial Inc., the Public Sector Pension Investment Board (PSPIB) and a numbered Alberta company for $200 million.

The Ottawa-based PSPIB is a Crown corporation charged with overseeing the pension assets of the federal public service, the Canadian Forces and the Royal Canadian Mounted Police.

John Dielwart, president of ARC Resources Trust, described the exemption of private trusts as an "egregious omission" to the new rules that were announced Oct. 31.
"By excluding private trusts, big private equity funds, big pension funds can still play this game the way they always have. Individual Canadians, either retired or saving for retirement, are basically being thrown under the bus. It's intolerable, in my view."


Did you see a pattern? Big pension crisis? Small investor forced out of income trusts by double-taxation on retirement savings? Big investor, PSPIB is a Crown corporation charged with overseeing the pension assets of the federal public service, the Canadian Forces and the Royal Canadian Mounted Police, takes over income trusts? Big investor is exempt from double-taxation?

Okay, keep good notes, boys and girls because this material will be on the quiz about equal treatment of citizens—Charter guarantee or Canadian myth?

And tomorrow, boys and girls, we’re going to study ‘Who pays for that?’ If the a federally regulated pension plan has shortfall which the assets of the plan do not cover, who pays for that?

nineofiveland said...

I'm going to ask my MP for help on this issue .. no wait .. my MP is Bev Oda .. I'm hooped!


I am a middle class conservative said...

Like I said: everybody is talking, but nobody can seem to do anything about this unfair, horrible, imoral, almost illeagal law that took away millions of retirement dollars to the public, ordinary citizen.....

Doreen Kroening said...

Since the budget has been passed I want to contact the Senators to describe the impact of the Trust tax on seniors. Is there an easy site to get their e-mail addresses?

Doreen Kroening