Chemtrade Logistics Income 6 50 Convertible Unsecured Subordinated Debentures CGIFF

Overcautious management and a Board not doing their job

[Hich1205]

Quarter over quarter the management is providing guidance just to overbeat them once the results are disclosed. It's supposed to be managed as an income fund with high distribution to the unit holders but that's not the case anymore and the Board is just doing what they are best at : sleeping.
The payout is just 20 % and expected to stay below 25 % and the management are stuggling to give the right answer to analysts about the dividende hiding behind the Board's resposnabilities.
I think this is a great business, we may see some challenges in 2024 but nothing that we should be worried about. My only concern is that i invested in an income trust  for a steam of revenues but the management just decided that they will manage the business as a corporation and keep low distribution level that is taxable as an income for the unit holders. I guess the management are just being obvercautious to just not have to deal with stress in their job

[biketrader98]

At what point do they lose income trust status?  Their must be rules around distributions.  Otherwise aren't they just avoiding taxes?

[biketrader98]

According to Investopedia, Canadian income trusts are required to pay out at least 90% of their net cash flows to their unitholders. Is this still true?  

[Hich1205]

extract from their financials " The Fund is a mutual fund trust and a specified investment flow-through trust (“SIFT”) for income tax purposes. The Fund is subject to current income taxes at the top marginal tax rate applicable to individuals of approximately 53.5% on all taxable income not distributed to Unitholders to note that taxables income is a non pubic information and is different

[bttmfischer]

The way I see it the trust funds, like CHE, and REITs have a couple of negatives in Canada 1. There is no dividend tax credit on the cash distribution; 2. Any  return of captal will actually reduce the ACB of the unit holder, making a phantom capital gain on the unit. 3. In some cases when the fund has a capital gain, it is taxed in the hands of the unit holder. Any CPAs here have other

[JosephM1]

Hmmm that explains alot about yourself!