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Income trust

One of the biggest news in Canada is the financial minster change the law on income trust. This costs a collapse in the Toronto stock exchange and the market lost 3% in one day. The advantage for a company change to income trust is mostly tax benefit. As an income trust, the dividen distributed to the stock holder become expenses, so they can be deducted from taxable profit. Many big business with steady flow of revenue are switching to income trust to evade tax. Obviously the government is not happy about the lossing the tax reveune and decided to close this loop hole. Most commentry on the news agree with the government’s decision, as it favours the people but not the big business. The only complains is the Conservative government break their election promise that the income trust tax code will not change. I think breaking promise is a minor offence in modern democracy, we already learnt not to trust the politician. However, I think changing the tax code is not a good idea. It is unfair to the non income trust company that their dividen are taxed twice. What the government should really do is scrap the double taxation of the dividen instead of re-taxing the income trust. The Canadian government is too big. Rather than asking for more money, it should control its cost.

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