Income trusts still going strong?
There is a lot of focus in the Canadian financial services industry on
- Heating Oil Partners - 1st 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.
Related Posts:
- Dividends vs. Trusts
- CIBC Fund Name Changes - Income Trusts Falling Out Of Favour?
- Trust The Trusts?
- Income Trusts Avert Bad News … For Now
2 Responses to “Income trusts still going strong?”
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Investorial » Blog Archive » Income Trusts Avert Bad News … For Now Says:
November 24th, 2005 at 9:49 pm[...] As the dust settles, Income trust investors are temporarily victorious over the federal government in the issue of Income Trust taxation. Turmoil has gripped the investment community ever since finance minister, Ralph Goodale, announced that he was re-examining the issue and suspended advance-tax rulings to companies that wanted to convert to an income trust structure. [...]
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Investorial » Blog Archive » Trust The Trusts? Says:
November 30th, 2005 at 9:53 pm[...] Editor’s Note: Do remember that this article only talks about business trust. It helps that it’s the trust type that I’m most familiar. I’ve also previously blogged that I feel too many businesses are converting to trusts that have no reason to utilize such a structure in the first place! [...]
