The Coalition of Canadian Energy Trusts has created a comprehensive study of the role of the trusts in the oil and gas sector as well as the Canadian economy. The CCET Report includes a number of downloadable elements (pdf). Their findings suggest that there is significant public harm including addition of environmental risk if the Conservative tax policies are allowed to cripple an otherwise healthy economic sector. The Coalition has called for due process and for policy makers to make decisions on facts and information. The iTrust Institute recognizes this report as an informative contribution to Canadian’s understanding of income trusts and related policy issues:

BACKGROUND Canadian Energy Trusts: An Integral Component of the Canadian Oil and Gas Industry

CCET REPORT (incl. executive summary)

Appendix A1 - Statement by the Minister of Finance - Oct. 31

Appendix A2 - Coalition Backgrounder

Appendix B - Taxation of Income Trusts: Is it Worth the Cost and the Turmoil? by Yves L. Fortin - Nov. 2006

Appendix C - The Inconvenient Truth about Trusts, by Gordon Tait (BMO Capital Markets)

Appendix D - A Perspective on Trusts and Taxes, by Gordon Tait (BMO Capital Markets)

Appendix E - Market Cap Weekly, BMO Capital Markets - Nov. 9

Appendix F - CO2 Enhanced Recovery: Where to from here? (ARC Energy Trust) - Nov. 21

Appendix G1 - Income trusts are efficient at investing and growing, PriceWaterhouseCoopers LLP - Dec. 7

Appendix G2 - Income Trust Report, PriceWaterhouseCoopers LLP - Dec. 11

Appendix H - Taxation Process for Trust Income

Appendix I - Comparison of Income Trusts and Public Corporations - Taxability

The release of the Report was made with a news conference that can be heard online.

The CCET should be applauded by investors and policy administrators for both the report and their invitation for public scrutiny.  The Institute is further reviewing the CCET release in the context of prior reports and analysis. 

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.

Two new studies, one from BMO Nesbitt Burns and another from PriceWaterhouseCoopers have shown the inherent flaws and misinformation on which the Department of Finance has based its decision to tax trust distributions and to “say no” to the “Income Trust Economy”.

First BMO Nesbitt Burns issued a study: Trusts Provide Tax Gain for Government, written by Gordon Tait, an income trust analyst.  He said, “We looked at 126 businesses that converted from equities to trusts between 2001 and 2005 to prove that Ottawa reaped more, not less, tax revenue after firms converted to income trusts...We found that on average the government stood to collect 2.2 times more in taxes by taxing the distributions of the trust than had been paid by the corporations prior to their conversion.”

And then a few days later, we see a fresh report out from PriceWaterhouse.  Their findings were reported to suggest that, “A review of Canada’s more than 250 income trusts indicates that trusts have been making an important contribution to the economy, investing their capital and growing their businesses at impressive rates.”

Significant specific new conclusions included the idea that, among the 250 diverse trusts studied, there was the net income reinvestment rate with more than 200% in 2005 and almost 400% in 2004.

The author concluded that, “The data clearly refutes the notion that the income trust structure is best suited to mature, low-growth companies in stable industries.”