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Article: No Halloween treat for income trusts: the rules have changed once more for income trusts. While they may still be a good investment, it's important to understand how the new tax treatment will work.
- Article from:
- CMA Management
- Article date:
- December 1, 2006
- Author:
CopyrightCOPYRIGHT 2006 Society of Management Accountants of Canada. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Income trusts seemed almost too good to be true ... and it looks they were.
On October 31, 2006, Federal Finance Minister Jim Flaherty held a scary news conference to announce a new tax on income trust distributions. Stating that $70 billion of new trust conversions had been announced so far this year and that trust conversion was "a growing trend to corporate tax avoidance," he introduced legislation to stem the rising number of companies converting to trusts.
Income trusts exploded in popularity chiefly because their structure allowed investors to be taxed directly on business income earned by the trust, giving trusts a tax advantage over such ...