Today we learn that Flaherty has relaxed the rules on REITs to expand their businesses abroad and receive tax flow through treatment. This is a complete contradiction to Flaherty’s earlier policy pronouncements and policy rationale:
(1) If income trusts cause tax leakage, which has never been proven, then why exempt REITs?
(2) If income trusts are limited by Flaherty as to their growth, which they are, then why let REITs expand? And why internationally?
How does that benefit Canadians who are tax subsidizing this activity, if Flaherty's tax leakage arguments are in fact true?
Come to think of it, where is Canada’s New Government’s transparency on alleged tax leakage?
(3) The arbitrary rationale at the outset was that REITs are “passive” entities and that royalty trusts and business trusts are “active” entities. If anything that would argue for the reverse tax treatment. However, accepting that logic to be valid, how can international acquisitions and expansions of REITs be considered “passive”.
(4) This new measure concerning REITs totally contradicts Flaherty’s earlier attempts to eliminate interest deductibility of foreign acquisition debt. Interest deductibility simple means servicing debt with pre-tax cash flows, just like distributions on income trusts and REITs are serviced by pre-tax cash flows. So whu would Flaherty loosen the REIT rules in July 2008 by allowing REITs to acquire foreign properties and preserve their REIT status, and yet in June 2007 Flaherty was trying to shut that vert thing down via non-deductibility of foreign acquisition debt.
Bottom line: Flaherty’s tax policies are the result of zero logic and total lobbying by self interested parties all behind closed doors. Canadians are policy takers.....mushrooms of the Harper government, whereby they are kept in the dark and fed Stephen Harper’s Income Trust tax.
Ottawa proposes REIT changes
Canwest News Service
Published: Tuesday, July 15, 2008
OTTAWA -- Federal Finance Minister Jim Flaherty released draft legislation yesterday that would amend federal tax laws to implement a series of previously announced initiatives, including changes that would allow REITs to expand abroad and still be exempt from the pending federal tax on income trusts.
The final legislation, to be tabled in the fall, would implement measures announced as part of the last federal budget, but other items as well, most notably dealing with real estate investment trusts, or REITs.
Under the proposal, announced Dec. 20, the federal Department of Finance said Canadian REITs would be allowed to expand abroad and still be exempt from the income-trust tax.
The federal government originally stipulated that REITs had to derive a minimum of 75 per cent of its income from Canada in order to be exempt from the income trust tax, which takes effect in 2011.
But that changed in December, and the real estate industry applauded the move.
Stakeholders have until Sept. 15 to issue comments to Finance regarding the proposed tax changes.
Tuesday, July 15, 2008
Contradictions abound: Flaherty doesn’t know REIT from wrong
Subscribe to:
Post Comments (Atom)
7 comments:
Flaherty doesn't know REIT from wrong......or Stephen Harper's Income Trust tax from shine-ola
How can "contradictions abound" for something that alleges to be a "Tax Fairness Plan"?
With the complete absence of proof about alleged tax leakage, and the loss of $35 billion in Canadians' retirement savings, more like a case of the "Tax Fraud Plan"
It seems that there are different rules for different people as is always the case with politicians--it all depends who has their ear on any given day & what agenda they have this week.
Flaherty must have REIT buddies who have been whispering sweet nothings in his ear to give them a break like this.
REITS get breaks , his corporate buddies get breaks , his pension cohorts get breaks , even his freaking law firm gets a break.
We , the people , get only the shaft & I , as one of the people , am tired of this whole thing.
These jerks act as if they are accountable to no-one--well , maybe just not accountable to us--it appears that lines of communication with Goldman Sachs & the US Treasury are wide open.
It appears that even if we are right , we are still wrong.
So say we all.
Dr mike Popovich
"Tax leakage", "tax fairness"...none of it made any sense to us in Oct.06, I was furious, BUT on the other hand it does not make sense to me now that CAITI criticizes Flaherty for exempting REITS. I'm retired and count on them, so I sighed with relief when I learned they'd not be touched by the new (and incomprehensible) measures that affect the rest of income trusts. Since the new tax regime for most income trusts WILL NOT be reversed, your attitude, which seems to be, "don't just kill some, kill them all!" is also incomprehensible.
Anonymous said;
"your attitude, which seems to be, "don't just kill some, kill them all!" is also incomprehensible."
That's one way of spinning it. The other way is to demand proof of tax leakage. Only with the facts can the proper policy emerge.
Your protectionist stance regarding REITs is about as defensible as Tecahers' stance....which is 2005 was "don't discriminate against income trust investors"....which in 2006 morphed into "Bravo government of the day, we don't actually mind if you discriminate, just so long as it's not againts us, but by all means shaft everybody else"
You don't happen to work for Teachers' do you? Flaherty? Department of Finance? REIT Association of Canada?
PS: Where and when has CAITI ever called for ""don't just kill some, kill them all!"?
Brent Fullard.
" Since the new tax regime for most income trusts WILL NOT be reversed, your attitude, which seems to be, "don't just kill some, kill them all!" is also incomprehensible."
Where on earth would anyone get an idea like that---all of us involved with CAITI believe in tax fairness for all trusts not just REITS---we are just wondering why REITS were exempt & now allowed to expand where all the others were not.
We believe in exemption for all income trusts not just one group.
I am extremely happy that you have found success with REITS---most of us are not that lucky--we have been struggling with massive losses in our savings because of the Halloween debacle.
I myself did not panic sell--my energy trusts have done well---my business trusts have been unbelievably bad.
All of us just want fairness for all trusts--it is Flaherty who is making a target of REITS not CAITI by issuing special exemptions.
Flaherty`s assertion was that all trusts cause tax leakage--REITS rate of leakage was supposedly less---this is no reason in itself for an exemption---either you have tax leakage or you do not.
If he is saying that REITS do not cause leakage , then it s reasonable to assume , trusts in general do not & should be exempt.
We do not want REITS killed , we want all trusts reinstated to be on an equal footing.
Dr Mike Popovich
Although Flaherty is a duplicitous, deceiving, pygmy, lecherous leprechaun - with Harper as his Bitch Boss Hog - at least one income trust sector gets some belated reprieve.
As has been stated, however, this does further show the hypocrisy of the whole CON mindset. The justice should be extended to all income trusts.
The only possible remedy left is to turf Deceivin' Stephen, Flatulent Flaherty and their CON brethren in the next federal election by voting Liberal.
Post a Comment