NEWS WATCH
Advocis, the Canadian association for financial advisors and Certified Financial Planners has published an article Breach of Trust in FORUM Magazine for December 2006.
Written by Leslie Hayman as President of iTrust Institute, the article went to publication the week the first week of November, the week in which the Government of Canada announced new taxes on income trusts.
The article provides a fundamental perspective on the income trust market and the state in its development at the time the new tax was put in place, also exploring considerations of security and investment risks and returns for financial professionals working to advise clients in regard to trust investments.
Investors and market participants opine on the nature of a possible leak of policy information at the point “no new taxes” was confirmed as the policy for income trusts in November 2005. Anger is being seen on all sides. Meanwhile, professional tax advisors are reinforcing for their clients that there might be an on-going concern about the underlying policy decision. Despite all the pain and feelings about it, the Tax policy threat may not yet be fully dead.
The Real Property Association of Canada (REALpac) and the Canadian Association of Income Funds (CAIF) announced the release of an independent governance study on income funds and real estate investment trusts (REITs) to say that "income funds generally compare favourably with public corporations in complying with the governance guidelines established by the Canadian Securities Administrators."
Standard and Poors has released a study looking at the (in)consistency in company definition of distributable cash by income trusts or funds in Canada. It’s not news if you follow the TrustInvestor studies or articles, but a useful contribution to public understanding in any case.
Every year, the Globe & Mail team of Report on Business writers undertake a review and ranking of companies using considerations related to corporate governance. And with inclusion of trusts in the S&P/TSX Composite Index, they have tested their abilities to include just the 15 largest trusts along with other public companies. The first round of results might be interesting in general.
iTrust Institute is studying the key features, perceived potential & benefits of income trusts starting from the premise that:
Equities managed and structured like income trusts to flow net gains through to owners by way of frequent and regular distributions of cash can offer superior rates of overall return, support market growth, enhance economic productivity and contribute to growth of the tax base with less risk than other equities given honest managers and a fully competitive market supported by open communications.
We will test this notion and explore related questions.