Alberta Net Beneficiary of new Income Trust taxation plan. Keep flogging the tax mule Jim Flaherty!

Where Will You Invest Now?

TCS newswire; Canada; On October 31st, 2006, the Government of Canada proposed changes in the taxation of Income Trusts, in an effort to "level the playing field" with Canadian Corporations. Income trusts will be taxed the same as Corporations, in a move the Government suggests will shift the otherwise predicted tax burden off of middle class Canadians. The predicted middle class tax burden would come from companies intending to convert to Income Trusts such as BCE, TELUS and Encana to name a few.

While the "Tax Fairness Plan" will have a somewhat negative impact over-all on market volume affecting primarily the Trusts themselves and the top percentages of investors. The tax plan will bring a large net-benefit to un-invested or diversified investors and the general public. Additionally the levelling "fairness plan" is expected to benefit that portion of Income Trust Company assets operating outside of Canada. Alberta is expecting that Income Trusts being taxed as corporations will feel more at home with its over-all lower Corporate Tax Rates (Alberta corporate tax rate is 10%). Alberta understands the Trust philosophy as evidence in its Heritage Trust Fund.

With the proposed legislation, Income Trusts (REITs excluded) will no longer be able to deduct distributions resulting in a Federal Tax Rate of 18.5%, plus Provincial Tax will be collected by the Provinces at a 13% taxation rate. Distributions to investors will be taxed as dividends.

TCS suggests Income Trusts tighten their collective belts, fire some lobbyists, tax lawyers and accountants, hire some MBAs and get to business. TCS also suggests investors could reap enough rewards from the Trust companies honest business efforts to more than compensate the losses to date and the impending taxes. Canadians as you know would rather the corporations began to pay their fare share, but will pay as in precedence forever, all the tax required by Government without complaint.

TCS further suggests investors stay put, holding your position as most Trusts got where they are by being good at their business. Your banker and Investment brokers will tell you sell but they made a lot of money off Income Trust clients and they are the other big losers in the equation for now.