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Paul D. Perry'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:

Thank you for the opportunity to comment on this paper, which was brought to my attention by the Canadian Association for Retired Persons.

As a retired Canadian who depends partially on income from investments for living expenses, I am most concerned at the threat of a reduced standard of living arising from personal taxation increases. Accordingly, I am opposed to increased taxation of Income Trusts, as these vehicles have been useful to offset the reduced personal income from other forms of relatively secure retirement-grade investments.

My suggestion to control rampant conversion of business corporations to the Income Trust model (which is presumably the motivation for studying this topic*), would be to make income from dividends equal to Income Trust income (after taxes). The current double taxation on dividends precludes this scenario. Equalization might be accomplished by decreasing either the dividend gross-up or the dividend tax rate on individual tax returns.

If my income is the same from dividends or from Income Trusts, I will choose to invest in the soundest business entities—I will not pick an Income Trust as I do now for my net income maximization. I believe that there would be far less motivation for "inappropriate" conversion of businesses to the trust model, as well.

*I believe that the Federal Government has little motivation to recover "lost" tax revenues from FTEs, given the size of the budget surplus and the budget announcements of November 14, 2005.

You have permission to post my comments on your website.

Paul D. Perry
Kanata, Ontario