Archived information is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.
Jim Logan'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:
My opinion would be that income trusts should no longer be an eligible investment for non-taxable/tax deferred entities such as pension funds or individual RRSP accounts. This action should be taken prospectively rather than retroactively so as not to damage people who have invested in income trusts in the past and force the dumping of units on the market.
I believe this solution would cause the least disruption and damage to investors since there should still be a healthy market for income trusts with taxable funds. I believe it would also address the concern of the Federal Government with respect to the deferral of taxes since there would no longer be any deferral of tax on the trust income. In addition I believe trusts are actually healthy for the economy because they force businesses to distribute money to the investors. There are far too many cases of corporate executives squandering investor money in misguided expansions, mergers, and acquisitions. I read a statistic in the Economist magazine a couple of years ago that two thirds of all mergers and acquisitions turn out to be detrimental to the companies involved not to mention the interests of consumers. In Canada all one has to do is recall the examples of Bell Canada and CIBC to be concerned about letting powerful senior executives have control of large amounts of cash retained in a corporation. Let's get the cash in the average investors' hands.