Trusts to be Taxed - Tory Halloween Bombshell - Calgarypuck Forums - The Unofficial Calgary Flames Fan Community

I-Hate-Hulse · 10-31-2006, 04:53 PM

I'd prepare for mass carnage at market open tommorrow.... lots of people in Calgary are going to take a haircut tomorrow I would expect...

Finance Minister Jim Flaherty has announced a new tax on income trust distributions in a bid to stem the growing number of companies that are converting to income trusts.
In a hastily called news conference Tuesday afternoon, Flaherty said $70 billion of new trust conversions have taken place so far this year — something he said is hurting the economy.

http://www.cbc.ca/money/story/2006/10/31/flaherty.html

I wasn't expecting this from a Harper government, but with the stampede of corporations to the trust structure, I think their hand was forced.

The last time they hinted at this everyone dropped what, 10-15% in unit price?

Buckle up for tommorow... this is not going to be pretty...

Hakan · 10-31-2006, 05:44 PM

The shoe shine guy downtown Vancouver is an income trust now.

Flames in 07 · 10-31-2006, 06:40 PM

The girls down the street running the lemonaid stand just converted to an income trust.

It was part of the PC platform, and given their record of executing promises it shouldn't be that much of a shockwave.

peter12 · 10-31-2006, 06:53 PM

Quote:

Originally Posted by I-Hate-Hulse

I'd prepare for mass carnage at market open tommorrow.... lots of people in Calgary are going to take a haircut tomorrow I would expect...

Finance Minister Jim Flaherty has announced a new tax on income trust distributions in a bid to stem the growing number of companies that are converting to income trusts.
In a hastily called news conference Tuesday afternoon, Flaherty said $70 billion of new trust conversions have taken place so far this year — something he said is hurting the economy.

http://www.cbc.ca/money/story/2006/10/31/flaherty.html

I wasn't expecting this from a Harper government, but with the stampede of corporations to the trust structure, I think their hand was forced.

The last time they hinted at this everyone dropped what, 10-15% in unit price?

Buckle up for tommorow... this is not going to be pretty...

These words should never be uttered during a Conservative government.

Red Mile Style · 10-31-2006, 07:02 PM

Trick or Treat?!

Ironhorse · 10-31-2006, 09:36 PM

TBH, I'm surprised it took any government this long to close the Income Trust loop hole...

Shazam · 10-31-2006, 09:45 PM

Well at least the Conservatives got rid of the double taxation of dividend income.

photon · 10-31-2006, 10:02 PM

Where's my carry over of capital gains?!

FireFly · 10-31-2006, 10:51 PM

Son of a bitch. Telus gifted me 100 shares when I started that mature this December... they've also stated they're turning into a trust in the new year... I've been eagerly anticipating Christmas as I watched our shares rocket up over $10 in the last month or so... ARGH!

Wookie · 10-31-2006, 11:06 PM

Quote:

Originally Posted by photon

Where's my carry over of capital gains?!

Yeah, that'll be sweet, 6 months in-between too!

I-Hate-Hulse · 10-31-2006, 11:21 PM

Quote:

Originally Posted by FireFly

Son of a bitch. Telus gifted me 100 shares when I started that mature this December... they've also stated they're turning into a trust in the new year... I've been eagerly anticipating Christmas as I watched our shares rocket up over $10 in the last month or so... ARGH!

It was the Telus / Bell conversion that broke the camel's back. Boo.

There's going to be a lot of PO'ed voters tomorrow who are 20% poorer tomorrow. A lot in Calgary too. Make no mistake - there are going to be BILLIONS wiped off the books tomorrow.... And a lot of calls for Harper's head. No one likes a tax, especially coming from those you'd least expect it from.

flamesfever · 10-31-2006, 11:29 PM

[quote=I-Hate-Hulse;615361]It was the Telus / Bell conversion that broke the camel's back. Boo.

I agree. As soon as I heard Bell was going to convert, I thought they were going to have to do something. Hopefully it won't bring down the government.

Wookie · 10-31-2006, 11:35 PM

Quote:

Originally Posted by I-Hate-Hulse

It was the Telus / Bell conversion that broke the camel's back. Boo.

There's going to be a lot of PO'ed voters tomorrow who are 20% poorer tomorrow. A lot in Calgary too. Make no mistake - there are going to be BILLIONS wiped off the books tomorrow.... And a lot of calls for Harper's head. No one likes a tax, especially coming from those you'd least expect it from.

Well a lot of the loss will be from people pulling their money out of these trusts. However that money will flow somewhere else. Some equities that have been less favourable because of trusts will be the recipients of some of these funds, which will drive up share prices. As well some people have been expecting this and have shorted some of the trusts. I emailed some friends when I heard about it to see how they felt in their respective businesses, I guess a lot of them expected it so I'd assume some people will have been prepared.

A few other I know have commented on some of the house buying (some, not a lot, not all, just some) in Calgary being related to unwarranted appreciation in valuations of O&G companies, options, trust units etc. It'll be interesting to see what happens with some situations. Although it might be impossible to track.

Regardless I never got into the trusts.. So I think it's funny, well not funny, but, interesting, the same way people find hurricanes interesting.... Sorry to anyone who takes a hit. Hopefully it won't be too painful.

FireFly · 10-31-2006, 11:40 PM

It's odd because the price of Telus shares went up by about $2 in the last two days...

Frick. I hope this doesn't hurt too much... might not since Telus is not yet a trust, and is still labelled the #1 wireless company in North America. *crosses fingers*

Clarkey · 10-31-2006, 11:47 PM

Why don't they just grandfather it in as to not f-over a whole bunch of investors? Just don't allow any new trusts, or put more limitations on them.

Wookie · 10-31-2006, 11:49 PM

Quote:

Originally Posted by FireFly

It's odd because the price of Telus shares went up by about $2 in the last two days...

Frick. I hope this doesn't hurt too much... might not since Telus is not yet a trust, and is still labelled the #1 wireless company in North America. *crosses fingers*

In the two days after the announcement it was up $9.00 bucks, you can expect to see that gone. What will make a difference after that is the over-reaction. Because there is no change in their, hmmm.. how should I put this, the core business is essentially the same, it's the business structure that will no longer change.

I think events that change the business (loss of customers, failure of a product, poor sales, decrease in growth), that causes an overkill because there is a change in confidence, view of failure, which turns from a correction into a totally overselling reaction especailly if it catches a lot of people off guard. Stop losses get hit and the loss just keeps tallying.

I can't see the overselling going on in this case because the business hasn't changed, that said a lot of people that bought in recently are going to get a licking... There is no reason for it to go below $55.00 and it shouldn't.

Sweet, let's see if I'm out to lunch on this one

looking forward to the market open

Wookie · 10-31-2006, 11:52 PM

Quote:

Originally Posted by Clarkey

Why don't they just grandfather it in as to not f-over a whole bunch of investors? Just don't allow any new trusts, or put more limitations on them.

They did, 4 years for current trusts trading before ?Wednesday? was it?

Quote:

Trusts that begin trading as of Wednesday or later would face the new measures in 2007. Existing trusts would have a four-year transition period and would not face the new rules until 2011.

Red Mile Style · 10-31-2006, 11:53 PM

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!

FireFly · 10-31-2006, 11:55 PM

Quote:

Originally Posted by Wookie

In the two days after the announcement it was up $9.00 bucks, you can expect to see that gone. What will make a difference after that is the over-reaction. Because there is no change in their, hmmm.. how should I put this, the core business is essentially the same, it's the business structure that will no longer change.

I think events that change the business (loss of customers, failure of a product, poor sales, decrease in growth), that causes an overkill because there is a change in confidence, view of failure, which turns from a correction into a totally overselling reaction especailly if it catches a lot of people off guard. Stop losses get hit and the loss just keeps tallying.

I can't see the overselling going on in this case because the business hasn't changed, that said a lot of people that bought in recently are going to get a licking... There is no reason for it to go below $55.00 and it shouldn't.

Sweet, let's see if I'm out to lunch on this one

looking forward to the market open

Yeah, but the goal is to have it at $65 for Christmas so I'll clear $4000 on my gifted shares... that'll pay for my trip to Spain next year.

$3000 is close though.

Wookie · 10-31-2006, 11:56 PM

Quote:

Originally Posted by Red Mile Style

awwwwwwwww, boo fricken who! Multi-million 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!

Well it's not just the corps losing their cushy tax structure, I feel bad for a lot of the retired people who have bought into these trusts as a income earning investment vehicle. Not only have a lot of the O&G trusts got killed in the last little while, but now this.. `