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New Tax Regulations on Income Trusts
Posted on Tuesday 31 October @ 20:06:00
Taxes Disability InsuranceTORONTO, Oct 31 (Reuters) - Canadian Finance Minister Jim Flaherty said on Tuesday the government will begin taxing income trust distributions and will cut corporate taxes to level the playing field between trusts and corporations.
Income trusts, which avoid most corporate taxes and pay the bulk of cash flow directly to investors, have surged in popularity in recent years as investors have embraced their rich yields.

However, economists have noted the structure robs the government of hundreds of millions of dollar's worth of tax revenues.

Flaherty said trusts created from now on would be subject to the new measures in the 2007 tax year, while measures for existing trusts will have a four-year transition period.

He said the general corporate tax cut would amount to half of a percentage point as of Jan. 1, 2011. He said the tax changes would provide bring C$1 billion ($893 million) of tax relief annually.


The previous Liberal government also made a attempt to curb the appeal of trusts last year, cutting taxes on corporate dividends in a bid to increase the appeal of dividend-paying stocks in relation to trusts

Nov 01, 2006
Additional commentaries are here http://www.globeinvestor.com/servlet/story/RTGAM.20061101.wstocks1101/GIStory/

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