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Article: What is the tax advantage of income trusts?
- Article from:
- Beyond Numbers
- Article date:
- April 1, 2007
- Author:
CopyrightCopyright Institute of Chartered Accountants of British Columbia Apr 2007. Provided by ProQuest LLC. (Hide copyright information)
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In my January column, I explained why I think the income trust tax proposed last October is a policy aimed at a non-existent problem. To recap: Tax "leakage" does not arise from income trusts per se; rather, income tax losses are a necessary consequence of tax deferral benefits for retirement savings, which are aimed at achieving a long-term government objective of increasing retirement savings. In addition, I discussed research suggesting that a commitment to pay out substantially all1 earnings is an effective way to reduce wasteful uses of shareholders' funds. This argument contrasts with Finance Minister Jim Flaherty's assertion that the exploitation of a tax loophole will create a less ...