NEWS WATCH
PricewaterhouseCoopers LLP released its report on intial public offering (IPO) activity in the Canadian stock market along with the prediction that IPO activity will shrink substantially in 2007. This is a big deal for the Toronto Stock Exchange, the seventh largest stock exchange in the world. It promotes itself as the market of choice for new issues and was, in 2005 at the height of income trust new issues, proud to be the third strongest market for new equity issues. But Pricewaterhouse reports that the Conservative government tax on trust distributions and onerous taxes on new trust issues has put a stop to that strong position and potential for the TSX.
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.
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.