The Globe and Mail printed a story today provided by Reuters. See below.
It has been “sanitized” by the Globe so as to reinforce the false belief that income trusts cause tax leakage with the words “Trusts are popular investment vehicles structured to pay little or no corporate tax” and the words “ Mr. Flaherty said the sector's growth threatened government tax revenues.”
The Globe deleted the following from the original Reuters news story, in order to provide an unbalanced account of the news:
“But critics of the trust tax, who say Flaherty has not been able to prove his tax leakage argument, took little consolation from the rules.
Brent Fullard, president and chief executive of the Canadian Association of Income Trust Investors said Ottawa dragged its feet on the conversion rules because it "bought compliance from the industry" on the controversial new policy.
The initial outcry over the tax plan was massive and market losses totaled more than C$20 billion.
"Why did it take 20 months? If nothing else, it reveals how little work they did beforehand," Fullard said.”
Ottawa releases rules on trust conversions
July 15, 2008
The Canadian government released draft rules yesterday designed to allow income trusts to convert to a corporate structure without taking a tax hit. "We are guardedly optimistic that these guidelines will provide income trusts with the clarity they so desperately need to make structural decisions going forward," said George Kestevan, chairman of the Canadian Association of Income Funds. Finance Minister Jim Flaherty stunned investors in October, 2006, with a surprise plan to begin taxing the then $200-billion income trust sector as of 2011, backtracking on a Conservative Party campaign promise. Trusts are popular investment vehicles structured to pay little or no corporate tax, allowing them to pass on a steady flow of cash to unitholders as distributions. But Mr. Flaherty said the sector's growth threatened government tax revenues. The new tax prompted most trusts to plan to restructure as corporations.
Tuesday, July 15, 2008
Posted by Fillibluster at 9:33 AM