Ottawa, September 8, 2005
The Department of Finance today launched consultations on tax and other issues related to business income trusts and other flow-through entities (FTEs). Submissions will be received until December 31, 2005.
A consultation paper entitled Tax and Other Issues Related to Publicly Listed Flow-Through Entities (Income Trusts and Limited Partnerships) is available on the Finance Canada Web site. The purpose of this paper is to promote discussion and third-party input on a number of key questions by providing background information on FTEs and related economic efficiency issues, an international comparison, as well as the estimated impact of FTEs on federal tax revenues.
An additional vehicle for public input will be symposiums to be organized and hosted by the Canadian Tax Foundation. The Canadian Tax Foundation is an independent non-profit organization devoted to education and research in the fields of taxation and public finance in Canada. The Foundation provides a forum for expert analysis and discussion of issues in these fields, but does not itself advise on or advocate specific policy recommendations to governments. The symposiums are intended to help foster a better understanding and public discussion of the tax and economic policy issues relating to FTEs. The Foundation will provide further information on these symposiums as soon as detailed arrangements have been finalized.
Today's launch of consultations by the Department of Finance follows through on the announcement in Budget 2005 that the government would have open and transparent consultations with stakeholders on tax issues related to FTEs.
During the consultation process, the Department will continue to monitor developments in the FTE market. Any future initiatives will be taken following these consultations and in full consideration of the costs and benefits related to FTEs.
Trusts and limited partnerships have been used by investors for several decades. In the last 10 years, publicly listed income trusts have gained popularity as investment vehicles. Since 2000, this growth has accelerated sharply.
Copies of the consultation paper can be found on the Department of Finance web site at www.fin.gc.ca/activty/consult_-eng.asp. Submissions can be made by e-mail at email@example.com. For greater transparency, comments received will be made available on the Department's Web site with the consent of the submitting parties.
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