QUOTE from Gordon Tait, trust analyst at BMO Nesbitt Burns, Calgary, following his study publication entitled “An Inconvenient Truth About Trusts”.

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.

From an Article By Steven Chase
in the Globe & Mail, Report on Business.

The study indicates that in BMO analysis, the problem with trusts appears because “Canada does not have a fully integrated tax system” And “The minister did not create this system and previous finance ministers failed to deal with it.”

Mr. Tait suggests that the pending 31.5% tax on distributions might best be imposed on only trusts held outside registered retirement savings accounts and pension funds.

He believes the tax measures “will effectively discourage or prevent corporations from converting to trusts”, but, “more than level the playing field” and causes “unnecessary harm to seniors”. He says that, in fact, “Trusts have produced higher returns with lesser volatility than regular equities”.