Investorial

I’m glad someone else saw the light! After my latest blogs warning about recent legislations to cut federal dividend taxes and Income Trusts avoiding additional tax burdens. My stance was that deciding if you wanted to earn income through dividend-paying companies or Income Trusts is still very premature due to the political turmoil gripping the nation.

I share with you an article describing the instability and unpredictable nature of law changes. Even if dividend cuts do come to fruition (which it most likely should), I prophecize that we have not seen the last debates about Income Trusts taxation yet!

There are two other matters to consider if you’re swayed by the dividend tax cut, one of them being the fact that this measure has not yet been passed into law by a parliamentary vote. The Canada Revenue Agency will start applying the lower rate for dividends paid in 2006, but a federal election would prevent a vote. In that case, the party forming the next government would have to decide whether to follow through or eliminate the tax reduction. If it’s eliminated, then the old dividend tax rate would apply and the price of dividend stocks could fall.

This is a very technical article by long time Globe writer, Rob Carrick. Normal readers should concentrate on the paragraphs that do make sense to them in plain english. Now that Prime Minister Paul Martin has dissolved parliament and set a vote for January 23rd, it is inevitable for many to wonder what will the future government decide; in favour of investors or tax revenue?

GlobeAdvisor.com: ‘Trusts versus dividends’ by Rob Carrick [via Stingy Investor]

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