RE:RE:RE:RE:Kasking discussing past $0.0733/mo or $0.88/yrBarstoolSage wrote: Finance's concern was the erosion of the corporate tax base.
The tax burden did not shift entirely to Canadian unit holders and Canadian tax coffers because the status of the holder determined their tax position PLUS the income trust could designate part or all of their payouts as a "return of capital", meaning they are giving you back part of your original investment...which is not income and not taxed, then taxed at capital gain rates when you sell.
(by virtue of the recepient having to reduce ther ACB by the ROC)
Canadian tax coffers get nothing from non resident owners, tax exempt owners, and corporations receive dividends tax free...save for a Part IV tax which is refunded to the corporation when it pays a taxable dividend to its own shareholders
I don't have the actual number, but for example, 100%loss of corporate tax losses only shifted say 70% of that loss to Canadian tax payers. Pick your own number, but this disappearance is permanent...year over year
And the Income trust sector is not dead at all. What actually happened is that the government halted the ability of companies to convert into one.
Many converted back, especially those who'd ONLY done so for tax reasons, not for business reasons, but a good number are still around, especially in real estate
Anything you see with a -un extension to their listing name is a trust unit.
AW-UN-T, for example is not real estate but a A&W royalty stream packaged up for investors and SRU-UN is Smartcenters
Labarador Iron Ore is an example of an income trust that coverted back to a Royaly Corporation
My own personal opinion is that preservation of the corporate tax base and quantities of money flowing into tax coffers was not a bad move, and though it created controversy and a PO'd bunch of investors with losses, I expect they would have been a lot more PO'd if as a result of massive corporate tax base losses, their own personal tax rates would have skyrocketed to make up for them
malx1 wrote:
Income trust sector could have been preserved if they just capped co's at $1B market cap.
the little guys would have been able to push into USA with acquisitions
Canadian competitive advantage
Sage, long conversation, and I see and respect your perspective.
The trusts here today that collect royalties for shareholders are still subject to corporate tax.
REITs were exempt if I remember correctly.
With that said, I detest double-taxation. Yes, there is leakage if foreigners held Canadian-based Trusts. But overall, I saw the trust structure as a tool that provided a higher valuation to small cap Canadian businesses, and they were positioning to use that premium valuation as advantage over US-based peers through M&A activity.
In addition to the business side, I also noted that a trust structure flowed earnings into the hands of unitholders. This was very powerful for low-income Canadian retirees who desperately needed to boost cash flow. Couples living off $24k/yr could add $12k, 50% cash flow, with a basket of trusts worth around $200k. That kind of income in retirement is the difference between poverty and some modest comfort.
The govt always talks about being an ambassador for small business. Trust structure for small caps could have back-up those words.
Now tell us more about your plan to climb the GH mountain to 10k...