A who's who of the Canadian trust sector weighs in on Ottawa's decision. They're almost unanimous it's a good thing there'll be not trust tax, but many thing the government should have never touched the issue in the first place.
***
"Obviously they were making policy on the fly. This business trust issue is like a hot stove. They (the Liberals) have put their hands on it twice and they've been burned both times."
Ed Sonshine, President and CEO,
RioCan Real Estate Investment Trust
***
"Corporations are winners because of the reduction of tax on dividends. Income Trusts have made the case very strongly that they're good for the Canadian economy. Advanced tax rulings coming back mean the corporate sector can look again at other spinoffs. And finally the small and large investor ... have won."
Rupert Duchesne, President and CEO,
Aeroplan Income Fund
***
"A really good solution was adopted that benefits the economy without penalizing anyone. In a matter of a few days and weeks hopefully we'll all be trading on fundamentals again."
Marc Tellier, President and CEO,
Yellow Pages Income Fund
***
"Obviously the consultative process didn't get to its conclusion. But the reality is that the world was changing. So I can understand why you would move quicker on this file than originally planned."
Gordon Kerr, CEO,
Enerplus Resources Fund
***
"I'm a little bit concerned people might hop on the bandwagon and push up (income trust) prices to unrealistic levels."
Leslie Lundquist, Portfolio Manager,
Bissett Investment Management
***
"It's definitely the right thing to do in our mind and now we can move on with some certainty. I think [the government] started to realize they were barking up the wrong tree. We're very happy."
Don Leslie, CFO, A&W Revenue,
Royalties Income Fund
***
"I hate to say this, but I don't think these changes will affect the trust sector significantly, if at all."
John Brussa, Partner,
Burnet, Duckworth & Palmer LLP
***
"We think there should be a level playing field in foreign ownership, too."
Allen Hagerman, CFO,
Canadian Oil Sands Trust
***
"We're very pleased with the decision. We think it was a distraction that should not have occurred in the first place."
Dave Gadhia, President,
Gateway Casino Income Fund
***
Dividend Q&A
The federal government has introduced legislation to reduce the tax hit on dividends paid by public corporations to make them more competitive with distributions from income trusts.
Q: When does the tax break on dividends kick in?
A: It applies to dividends paid in 2006 and thereafter.
Q: When can I start claiming it on my tax return?
A: You claim it on your 2006 return, which you'll file in early 2007.
Q: Has the tax cut been passed into law?
A: The Liberal government has introduced the legislation for this tax move, which means that the Canada Revenue Agency is treating it as if it were law. Parliament must sill vote on the legislation, which may not happen because of the pending federal election. If that's the case, then the new government would have to decide whether to follow through or eliminate the measure.
Q: Are there risks for investors?
A: If you buy dividend stocks to take advantage of the tax reduction and the move is rescinded, then you could face higher than expected taxation.
Q: Are there any other timing issues?
A: Provincial governments must consider the extent to which they will match the federal dividend tax cuts. Provincial tax rates on dividends vary.
© The Globe and Mail
Only GlobeinvestorGOLD combines the strength of powerful investing tools with the insight of The Globe and Mail.
Discover a wealth of investment information and and exclusive features.
