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moneysense.ca, 9/09/05
Income Trust Mania
The flood of companies that are converting to income trusts is threatening to turn into a much larger one. Just in the past week, Precision Drilling (TSX: PD), an oil field services company, CI Fund Management (TSX: CIX) and the newspaper properties of CanWest Global (TSX: CGS.SV) announced their intentions to convert their operations into an income trust. My portfolio holdings in AGF Management (TSX: AGF.NV), Bell Canada (TSX: BCE) and CGI Group (TSX: GIB.SV.A) have strengthened because of speculation that they will reorganize part or whole of their operations into an income trust structure (the chances seem fairly remote for the last two securities).
The federal government is now worried about the revenue lost from the flood of income trusts, which avoid paying corporate income taxes. Here’s an idea: How about levelling the playing field by reducing or eliminating the double taxation of dividends?
moneysense.ca, 9/09/05
Here…Here…good post.
Typical Canadian government garbage – just keep in mind that as usual they are just talking out of both sides of their mouths again.
I read about the BCE income trust idea as well – I am going to keep an eye on this as I too own BCE. If it does happen, it will be interesting to see if the trust payouts become higher than the current dividend payout due to reduced income taxes and all the other factors that seem to make an income trust structure more efficient.
You are right. They talk mostly about taxing income trusts in some manner, instead of reducing tax on dividends.
I am not sure it is a good idea that BCE becomes an income trust. After all, they face a lot of new competition for local telephony now and they have to constantly make capital investments. I’m not complaining if it unlocks value
Just that I will consider selling when it happens.