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Grant and Carol Scott'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:
Trusts Consultation Process:
My wife and I are two of many Canadians who hold trusts in part to build our RRSPs.
We are in our 60's and will soon be using the proceeds from the RRSPs for a substantial part of our income.
The RRSPs with OAP and CPP are our sole retirement income. We have no private, company or government pensions. The capital in our RRSPs have been substantially reduced since Mr. Goodale has discussed the possibility of taxing trusts. If a new tax applies we will see the dividend portion of the RRSPs reduced. The government will in effect tax our RRSPs.
We understnd that trusts have a special tax advantage that may be seen as a loophole to paying corporate tax. We also understand that the government may want to close all or partially, this loophole. Fair enough. Although not economists we don't understand why the government would choose to reduce the capital value of trusts by billions of dollars (and about $50,000 in our RRSPs) to save $300,000,000 when ultimately you (they) get the tax back when we take the benefits from our RRSPs as income.
We bought these trusts, and ironically the most conservative business trusts, that we understand the government is focussing on, in good faith.
1. Grand father in existing trusts or phase in a new tax.
2. Reduce the corporate tax to make trusts less attractive for the formation of new trusts.
3. Some combination of both.
In conclusion we believe in fairness but we feel that it would be very unfair for the government to effectively reduce the capital and dividends in our RRSPs at this time in our lives after years of building RRSPs for our retirement .
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Grant and Carol Scott
Hornby Island British Columbia,