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Mr. and Mrs. L Sinka'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:
To: The Department of Finance
Regarding: The Consultation Paper on Tax and Other Issues Related to Publicly Listed Flow-Through Entities ( Income Trusts and Limited Partnerships)
Nov. 15 2005
In recent years, budget after budget, the federal government has shown ever larger surpluses. While in and of themselves this is not a bad thing, and certainly better than a deficit, a point has now been crossed, wherein it begins to look more and more like excessive taxation rather than frugal management of the economy.This is evidenced by the Minister of Finance announcing on Nov. 14 in his financial statement that the nation can look to permanent mega-surpluses far into the future. The numbers indicate $14-billion in excess funds this year, moving to $20-billion in coming years, for a total of $54-billion in the next six years.
With this in mind, the estimated tax losses from existing income trusts and other FTE's, of $300-million yearly is miniscule.
The Finance Minister as well as others in this government have recently indicated that the lowering of taxes will be given a higher priority than in the past.
In light of this, we submit that income trusts are in line with this new direction.The distributions from these entities do not escape taxation, just DOUBLE taxation.Tax is still paid in the hands of unit-holders, most of whom are in the highest marginal tax brackets.
Having run our own small business for 20 years, we have no private nor government pensions.
Our savings over those years went to carefully construct a portfolio on which we could retire.
Income trusts are the backbone of this portfolio. We knew and expected market risk, and yes, one or two of them blew up. We can handle that. What we did not expect and cannot handle is that our own government is now threatening to destroy our future.
We are now retired.
Since Sept.19, we have seen the values in this portfolio, which were built on a lot of sweat (and sometimes tears) over a lifetime drop like a rock.
If your government sees that change is necessary, do it by grandfathering these trusts.
Do not suddenly pull the rug out from under hundreds of thousands of Canadians at the end of their working lives.
Mr.& Mrs.L Sinka