The knell of corporate income tax sounds

Converting a corporation into an income trust appears to be the latest Canadian fad. What was once a tax loophole few, and only mature corporations exploited appears to be becoming business as usual, after today’s announcement that Bell Canada will follow Telus’ lead and transform their corporations into trusts. In the past RBC CEO Gord Nixon has suggested taht Canada’s largest bank could benefit by converting to an income trust structure. In the last five years, the number of income trusts in Canada has more than quadrupled. With every new trust conversion, upwards of 80% of its corporate income is filtered through unit holders avoiding all but personal taxation. The impact of the proposed telecommunications’ trust conversions on Federal coffers looks to be $1.5 billion annually, according to NDP finance critic Judy Wasylycia-Leis. Will the Conservative Party of Canada act to ensure the stability of Canada’s revenue raising system and finally close this loophole?

~Manatee

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6 Comments

  1. Gnomes said,

    Thursday, 12 October 2006 at 1:43 pm

    The tax code is currently a labryntine behemoth, due almost entirely to the fact that every few years some loophole or other needs to be closed. Even with the Tories in power, you can rest assured that the government will get their money.

  2. Manatee said,

    Tuesday, 24 October 2006 at 11:50 pm

    How many court-challenges programs would that pay for? I’m worried that the conservatives don’t want their money or the things they can fund with it.

    I added a link to “Canadian Observer” where some interesting discussions of income trusts have occurred, plus, I like his/her style.

  3. Gnomes said,

    Tuesday, 31 October 2006 at 9:31 pm

    See?

  4. Manatee said,

    Tuesday, 31 October 2006 at 10:45 pm

    Good thing this blog is such popular reading within the federal finance department. Wasn’t your original comment more of a ‘it’s no big deal’ rather than an ‘of course they’ll fix it?’ Regardless, I liked what I heard in the press conference today, but I’m no expert. I also like that all the propaganda in my place of employment that I had thought about counter-propagandizing will have to come down!

    I wonder what Monte Solberg thinks?

    “Why does the finance minister not just admit that the real reason he wants to gut the retirement nest eggs of seniors and investors is because they think they can get away with it?” -Monte Solberg, September 2005

  5. Gnomes said,

    Tuesday, 31 October 2006 at 10:46 pm

    Wasn’t your original comment more of a ‘it’s no big deal’ rather than an ‘of course they’ll fix it?

    I believe what I said was “you can rest assured that the government will get their money.”.

  6. Manatee said,

    Tuesday, 31 October 2006 at 11:05 pm

    I know what you said, I just refuse to give you credit for thinking they would actually close this loophole, rather than increase the dividend tax credit again, or some other roundabout means of making income trusts less attractive. Any further comments on this thread should include thoughts about Monte Solberg and the Conservatives last election campaign.

    It’s amazing to compare how little press the income trust stroy, save the RCMP investigation BS, has gotten compared to coverage since this afternoon. A little more press coverage and this could have been taken care of a year ago.


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