Income Trust Tax Decision - a year later
31 October 2007
Income trust investors still angry one year later
… It was one year ago that Finance Minister Jim Flaherty stunned the investment community by announcing the Conservative government would bring in a tax on income trusts by 2011 — reversing a campaign pledge made months earlier to leave them untaxed.
The wrath of the hundreds of thousands of investors who had poured billions of dollars into these trusts was immediate and it wasn’t hard to see why.
Income trusts had fast become a favourite place for many investors to put their money — especially seniors.
Most trusts paid distributions that were far higher than what they could earn with GICs or dividend-paying stocks.
… Within two weeks of the Halloween announcement, the income trust sector lost about $35 billion of its market value, according to industry figures.
… A year later, the sector has partially recovered … But for most trust investors, the only big gains have come from takeover offers for their trusts and the often juicy premiums attached to them.
More than 40 trusts have been acquired since the Halloween announcement.
Burned by the trust tax, couple turn to NAFTA
JOHN PARTRIDGE With a file from Reuters
October 31, 2007
A wealthy Chicago couple are going after the Canadian government under the North American free-trade agreement for at least $6.5-million in damages for losses they say they suffered because of Ottawa’s decision to eliminate the tax-free status of energy and income trusts.
On the eve of the first anniversary of the federal government’s surprise Halloween raid on trusts of all varieties, Marvin and Elaine Gottlieb said they have filed a Notice of Intent to Submit a Claim to Arbitration under NAFTA - and that they are the first Americans to do so in connection with the trust decision.
The move to start taxing the trusts in 2011 on the same basis as corporations marked the reversal of a campaign pledge by Prime Minister Stephen Harper not to touch the then hugely popular investment vehicles.
The Gottliebs said at a televised press conference in Ottawa that they are among thousands of Americans who lost an estimated $5-billion on energy trusts in the fallout from the move by Mr. Harper’s government.
