RESEARCH ARTICLES
QUOTE:
“People think that when they go into income trusts that they can’t lose anything—they can lose, very heavily...They should be much more educated and they should be asking questions.”
FROM: Tavia Grant and Roma Luciw
Report In Globe & Mail
QUOTE:
A lot of seniors are being taken in on this because they are not getting the yields that they thought they were going to get...We want regulations to police the income trust area, to police it if people are losing their money.
“Tax leakages mean less federal money will be available for health care and social security...a federal regulator should be established to monitor trusts more closely.”
FROM: Tavia Grant and Roma Luciw
For the Globe & Mail
Report on an Ottawa Press Conference
QUOTE:
“We are calling for a moratorium on any further conversions...There needs to be a study assessing how the government purse and investing patterns will be affected before any more companies are allowed to proceed...they lack transparency and accountability.”
The concern is that many income trusts are being overvalued, that there is a gap between what they actually hold and what they are committed to paying out...If we tighten the rules up a bit, we could play a role in protecting people.
FROM: Tavia Grant and Roma Luciw
For the Globe & Mail
in Report on Ottaw Press Conference
Independent financial expert and analyst, Diane Urquhart has published an “independent” study “Income Trusts: Heads I Win, Tails You Lose” that forwards the premise that reductions in income trust distributions reflect the problematic structure of income trust securities. Ms. Urquhart presented her study with the NDP Finance Critic, Judy Wasylycia-Leis,at a press conference in Ottawa.
The Income Trust study assumes that investors buy income trusts for cash yield alone and so, suffer terrible surprise capital oss when distributions are reduced by trusts. The study pays particular and relatively undue attention to those trusts that have cut back on distributions to the exclusion of a full data set.
The Certified General Accountants of Canada released a useful report, “Demystifying Income Trusts”. It’s an official “response to widespread interest and increasing relevance [of trusts] to Canada’s financial markets”. Some media and brokers are twisting observations from the report into frightening news about trusts. But the report is more informative and useful than that.