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Dale Codd's Submission in Response to Finance Canada's Tax and Other Issues Related to Publicly Listed Flow-Through Entities (Income Trusts and Limited Partnerships) consultation:
Minister of Finance
November 9 2005
Dear Mr. Goodale
Thank you for your prompt reply to my comments on Income Trusts, I appreciate that you have a difficult decision to make regarding the future of these trusts.
On reviewing the Consultation Paper as you suggested I feel there are issues that should be taken into consideration.
Income Trust were originally designed to encourage Canadians to invest in Canadian Companies in an effort to supply them with the funds to carry on there works, There capitalization amounts were set by the companies and the units were purchased by the market in most cases at premium rates thereby giving the companies more working capital and helping to assure there success.
These Income Trusts still make purchases of equipment and supplies, pay wages and some pay royalties, contributing indirect tax dollars to the government. The profits go out to unit holders, usually at a more reasonable return that most investments and are taxed in the hands of the unit holders. Also when the units are sold the unit holder is subject to recapture. Regular companies spend more time and money researching and implementing methods of legal tax avoidance. Perhaps other incentives like removing the ridiculous grossing up of dividend income on Canadian dividend would in itself encourage investment in other than Unit Trusts.
The income from the units held by seniors, as in my case, provide me with a monthly income that if compromised by new tax legislation, will need to be subsidized by Gain and the Supplement. I am sure I am not alone so in effect you will be taking money out of one government pocket to put it in another.
The Economic Efficiency of the Unit Trusts I believe is fair and equitable and comparing it to other less progress countries policies has little or no value.
I am attaching an editorial from the Vancouver Sun dated November 5 2005 which I believe is very relevant to this issue.
Please consider this matter very carefully before making changes that will be detrimental to a large number of Canadians.
Encouraging Canadians to invest in well paying Canadian opportunities should be encouraged not penalized.