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Alastair Murdoch'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:
You have permission to post this on your web site. I'd prefer correspondence to be in English.
As you point out, FTE's exist in part because of the tax savings which they afford in contrast to the partial integration for corporations that are not Canadian-controlled private ones. An obvious solution is therefore to reduce the tax rates on corporate income to that on small business income. I congratulate the government in moving in this direction, and I regret that this movement was halted for political reasons. The research I have read (including your own) clearly indicates that corporate taxes are much more damaging to economic growth than any other form of taxation used by western governments. The fact that FTE's have effectively lowered the tax rate on business income should be applauded since it encourages economic growth. Now the government should follow through so that such low rates of taxation are available to other entities such as corporations whose shares are publicly traded.
A minor point – returns of capital should be required to be reported on T3 or T5 forms so that it is more likely that the eventual capital gain is not under-reported.
Alastair Murdoch, CA, PhD
Victoria, British Columbia