RE:Today's news...Rakaposhi wrote: Does this not mean our distributions will become taxable and will no longer be considered eligible?
Rakaposhi:
It is complicated for sure, but impossible to tell at this point what the impact will be!
The major difference is that Corporations pay eligible dividends whereas Income Trusts "flow through" their income/revenue stream to the unitholders with the same characterization as they receive the income. Income Trusts (like REITs, for example) can also flow through Capital Gains and Return of Capital to unitholders whereas Corporations cannot. So depending on how thei income/revenue stream is structured it could be positive, negative or essentially neutral from a taxation point of view. Impossible to tell at this point!
Examples of other flow through entities during the 2019 tax year:
BEP.UN (an LP but still a flow through): 45% Return of Capital, 53% Eligible Dividends
EIT.UN (essentially an income trust): 88% RoC, 10% Capital Gain, 2% Eligible Dividends
I hope that Alaris management will shed some light on the anticipated tax consequences for shareholders/unitholders as a result of the conversion - so that we are able to cast "informed" votes!
Note that I am not endorsing or opposing any proposed restructuring. Just providing examples of the taxation characteristics of similar "flow through" entities trading on the TSX.
Cheers!