Trusts to be Taxed - Tory Halloween Bombshell

[photon]

Originally Posted by mykalberta

stuff

Cool, thanks! That makes sense.

[anyonebutedmonton]

Originally Posted by Red Mile Style

awwwwwwwww, boo fricken who! Multi-billion dollar corporations are going to have to pay their taxes too!

Oh, the humanity! Why can't they just tax the middle or lower classes like true neo-cons?!?!

waaaa!

You sir are from the east...

[Red Mile Style]

Originally Posted by anyonebutedmonton

You sir are from the east...

Well, I never...

A) That's ma'am, not sir...
B) I have lived in Ottawa for exactly one month today after living in Calgary for 5 years and Regina for 17 years.

I am not from the east!!!!

I am so freaking home-sick!

[Red Mile Style]

Damn You Fotze!!!!

[FireFly]

Telus recovers partially, ending the day at $56.15. Not as bad as I feared. It's still a $900 hit to me, but I have good feelings about Telus recovering nicely from this.

[Wookie]

Originally Posted by FireFly

Telus recovers partially, ending the day at $56.15. Not as bad as I feared. It's still a $900 hit to me, but I have good feelings about Telus recovering nicely from this.

Not bad! It still might go down a bit over the next little while.. But I think you'll be fine!

[I-Hate-Hulse]

Originally Posted by Agamemnon

That might look 'anti-foreign-investment', something I doubt the government wants to do. A tax levied solely against foreign investors might appear different than changing the tax code for all trusts. Besides, I don't think foreign investors are the issue here; conversion to trusts to avoid paying taxes is.

I talked to a Tax Director today... can't go after the foreign investors specfically due to the current tax treaties in place with other countries. It'd take forever to re-negotiate them.

[Tron_fdc]

I tlked to a guy that lost $300k in the last 24 hours. Not sure what he was in, but GOOD GOD would that ever suck balls.

[I-Hate-Hulse]

Crikey - Still in a free fall Thursday morning.... Vermillion down another 9%, Crescent Point down another 5%....

This could be interpreted as "Son of NEP" in Calgarian voters methinks, and losing critical votes in a Tory stronghold could be fatal next election. Losing 15%-20% of your savings stings for a very long time, and ultimately Joe voter looks out for #1.


$20 BILLION gone in losses. Amazing.

[MarchHare]

This could be interpreted as "Son of NEP" in Calgarian voters methinks, and losing critical votes in a Tory stronghold could be fatal next election. Losing 15%-20% of your savings stings for a very long time, and ultimately Joe voter looks out for #1.

What are small-c conservative voters from the West going to do? Vote Liberal? Highly unlikely. Even more unlikely they'll vote for the NDP. They'll either hold their nose and continue to vote Conservative or else they'll create a new party, fragmenting the right-wing vote again.

[Clarkey]

They should have put a moratorium on trusts, allow the current ones to exist without letting any new ones get through and this would have been a lot softer of a blow. It's embarassing that the conservative's would pull such a crappy move for investment in this country. Something had to be done I suppose but a moratorium would have been a better way of handling it.

[Mccree]

It is all panic selling...There is a 4 year transition rule so nothing is really changing now. The existing trust will as normal for now.. The sellers just need to relax.

An the trust were trading at a 20-50% premium. This is just a market correction that was going to occur someday.

[Agamemnon]

Originally Posted by Mccree

It is all panic selling...There is a 4 year transition rule so nothing is really changing now. The existing trust will as normal for now.. The sellers just need to relax.

An the trust were trading at a 20-50% premium. This is just a market correction that was going to occur someday.

Maybe its a good time to buy, assuming some of the drop is panic/selloff... could be some bargains to be had at some point.

[Mccree]

Originally Posted by Agamemnon

Maybe its a good time to buy, assuming some of the drop is panic/selloff... could be some bargains to be had at some point.

I was thinking the same thing.

[octothorp]

Originally Posted by MarchHare

What are small-c conservative voters from the West going to do? Vote Liberal? Highly unlikely. Even more unlikely they'll vote for the NDP. They'll either hold their nose and continue to vote Conservative or else they'll create a new party, fragmenting the right-wing vote again.

There really are strong corrolations between the current situation and the 1979 Joe Clark government. The legislation that it toppled on was an 18-cent excise tax on gasoline, seen as being bad for Alberta and good for everywhere else. (The actual reason that it toppled on this had little to do with how it would affect Alberta, but rather because the SoCreds wanted all the revenue from the program to go to Quebec).
Quebec, western Canada, and the Maritimes all stayed more or less the same during the next election, but there was a 40-seat swing in Ontario. And Ontario was the province that had pushed hard to get the excise tax implemented. Clark was defeated because although he did the populist thing and introduced legislation that hurt one region (which had supported him fully) for the good of the most populous province (that had supported him only sightly), he was seen as weak because he was unable to get that legislation passed. And it became a given that whoever won the 1980 election would introduce some form of excise tax on the gas industry, so he lost out to the Liberals because it was obvious that they would implement similar policies, but be far more successful at getting them through parliament. If an election were called soon, voters today might do the same thing... assume that these taxes would be introduced by any winning party, but would actually be more likely to get passed by a liberal government. Another similarity between the two: at the time that the 1980 election was called, the liberals were technically without a leader, since Trudeau had already announced his resignation.

[Sylvanfan]

Yeah, investors need to take a longer term outlook on things. Really how many people had all their eggs in an income trust bracket anyways? If you did thats not exactly the most logical thing to do in terms of a long term investment strategy. Afterall when something seems to good to be true, it usually is. Markets always have up and down spikes and these income trusts had really spiked. They were bound to be forced down at some point in time. Long term this will be better for the economy. Sorry to those who lost out, but if you don't have the time to see it through, or you can't afford to lose that money, than you shouldn't have made the investment.

[Thunderball]

Another potential positive is that this action prevents the theoretical silent collusion between companies in protected industries... such as telecommunications.

Say BCE, Telus, Rogers, et al. all decide to switch to income trust... their revenue would cease to head to ventures keeping them at the cutting edge of technology, since they would have to allocate their funds to distribution. Since there is no outside competition... they could get away with stifling the consumer. Where are they gonna go? Canadian cellular costs are already 70% higher on average, and have the longest contracts... why not screw them some more.

Now say Vodafone, Verizon, Boost, Sprint, etc. were allowed to proliferate here... they'd be eaten alive by that tactic. But since Canada loves its protectionism... this is what had to be done. Its unfortunate that legimate investment has to suffer because of it.

[I-Hate-Hulse]

Originally Posted by Thunderball

Say BCE, Telus, Rogers, et al. all decide to switch to income trust... their revenue would cease to head to ventures keeping them at the cutting edge of technology, since they would have to allocate their funds to distribution. Since there is no outside competition... they could get away with stifling the consumer. Where are they gonna go? Canadian cellular costs are already 70% higher on average, and have the longest contracts... why not screw them some more.

Not entirely true, but I do see your point. A good trust, just like a good corporation and its dividends, will manage its payout ratio so that R&D and capital expansion activities are still done, while flowing excess income back to the unitholder. That said, there's bad management out there (probably the same ones that thought it was a great idea to turn a shop with spotty revenue streams into a trust) who'll set the payout ratio too high.

Even before this announcement, there have been a number of Trusts out there that were paying out way too high, and the market responded by chipping away at their unit price, due to the perceived risk.

[Thunderball]

Originally Posted by I-Hate-Hulse

Not entirely true, but I do see your point. A good trust, just like a good corporation and its dividends, will manage its payout ratio so that R&D and capital expansion activities are still done, while flowing excess income back to the unitholder. That said, there's bad management out there (probably the same ones that thought it was a great idea to turn a shop with spotty revenue streams into a trust) who'll set the payout ratio too high.

Even before this announcement, there have been a number of Trusts out there that were paying out way too high, and the market responded by chipping away at their unit price, due to the perceived risk.

But that's exactly it... good management. In the virtual oligarchy you see today in many protected industries (banking, telecom, etc.), they have no enticement to provide anything special to the consumer. It'll be all about profits to the cronies, and stifling the consumer. From their point of view, why not? They're the only game in town, and its "not that bad... and they're Canadian..." I think a lot of well managed trusts had to take a hit to stop some abuse from sheltered companies.

Put some US and European competition in there, and companies like Telus won't have the resources to do this, they'll be too busy competing and providing the best and most cost effective service possible in order to retain a large enough market share to survive.