There is a lot of focus in the Canadian financial services industry on income trusts lately? Ever since the late 2000 market crash, income trusts have been the darling of Canadian investors, promising tax efficiency and steady cashflow returns. However, the last few months have seen more turmoil for the asset class. Here are a few recent articles for your reading enjoyment

• Heating Oil Partners - 1^st Canadian Income Trust to file for bankruptcy
• Canadian Finance Minister to review income trust structure
• Globe & Mail article about income trust taxation review

Many companies such CanWest Global are preferring to go to market as income trusts. Investors are calling for companies to restructure themselves. A good example was when investors were calling out for Wendy’s to spin out Tim Horton’s as an income trust. Wendy’s does not mention income trusts in their official news releases. I would even say that investor mania about the income trust structure is slowly setting in.

Two trends are quickly recognizable. Companies that have no business operating as an income trust will quickly find the payout structure hard to maintain. The federal government is also losing tax revenue because the onus for reporting income now falls onto individual investors, something that is harder and costs more to enforce for the government.

Uncertainty befalls the income trusts, and its future could be deeply impacted by the upcoming federal review.