Breaking News from The Globe and MailCanadianBreaking News from The Globe and MailCanadian stocks soarBy TAVIA GRANT
Thursday, November 24, 2005
Globe and Mail Update
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The Canadian stock market hit its highest level in more than five years Thursday, led by income trusts after the federal government unexpectedly decided not to hit the sector with a new tax regime.
Dividend-paying stocks, such as BCE Inc., also gained after Ottawa said it plans to instead cut taxes on corporate dividends.
The S&P/TSX composite index rose 157.91 points to 11,077.71 in early trading and earlier touched 11,146.12, its highest level since September, 2000.
The gains came after Ottawa decided to level the playing field with income trusts by cutting taxes on corporate dividends.
TSX Group Inc. was the biggest gainer, rising $4.29 or 11.2 per cent to $42.48.
CI Fund Management Inc. gained $2.47 or 10.6 per cent to $25.85. The investment firm had been mulling a conversion to an income trust.
Shares of dividend-paying companies climbed. BCE Inc. shares, which rose 4.8 per cent yesterday, their biggest gain in more than three years, extended gains. They rose $2.44 or 8.8 per cent to $30.34.
U.S. markets are closed for Thanksgiving.
“Reducing the tax individuals pay on dividends will encourage savings and investment and will help establish a better balance between the tax treatment of large corporations and that of income trusts,” said Finance Minister Ralph Goodale. “This action will benefit Canadians and result in bottom-line tax savings for them.”
The finance minister also reassured income-trust owners: “We are not proposing any tax on trusts,” the minister said.
The announcement came after the market's closed yesterday and two months ahead of expectations. The decision is expected to hoist both high dividend-paying stocks and a battered income trust sector.