Comments on: Forestry on the Mend, What stocks to consider? http://investingincanada.info/2010/01/forestry-on-the-mend-what-stocks-to-consider.html Canadian Stock Talk Fri, 07 May 2010 12:34:09 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Smac20 http://investingincanada.info/2010/01/forestry-on-the-mend-what-stocks-to-consider.html/comment-page-1#comment-367 Smac20 Thu, 14 Jan 2010 02:39:33 +0000 http://investingincanada.info/?p=300#comment-367 I wouldn't call it dangerous. This decision to change the tax exempt status of income trusts was made a couple of years ago and the market reacted immediately. The stock market reacts to news instantly so it is not going to be a shocker when the new rules come in. Many trust are converting back to common status before the deadline. If the trusts remain as income trusts once the new rules come in to play they will simply be double taxed: 1st at the corporate level and then at the individual level. All common stock experiences the same taxation except there is a dividend tax credit applied to a potion of the income received by individuals; this is why I suggest income trusts are a great addition to tax sheltered accounts like TFSAs and RRSPs. The trusts that do convert will be trading in your income trust shares for common stock. It should turn out to be a 1 for 1 change so an investor should be on a level playing field and then receive dividend tax credits. The new laws are likely the reason why so many trust currently yield over 9% annually in payouts. I wouldn’t call it dangerous. This decision to change the tax exempt status of income trusts was made a couple of years ago and the market reacted immediately. The stock market reacts to news instantly so it is not going to be a shocker when the new rules come in. Many trust are converting back to common status before the deadline. If the trusts remain as income trusts once the new rules come in to play they will simply be double taxed: 1st at the corporate level and then at the individual level. All common stock experiences the same taxation except there is a dividend tax credit applied to a potion of the income received by individuals; this is why I suggest income trusts are a great addition to tax sheltered accounts like TFSAs and RRSPs.

The trusts that do convert will be trading in your income trust shares for common stock. It should turn out to be a 1 for 1 change so an investor should be on a level playing field and then receive dividend tax credits. The new laws are likely the reason why so many trust currently yield over 9% annually in payouts.

]]> By: the Cynical Investor http://investingincanada.info/2010/01/forestry-on-the-mend-what-stocks-to-consider.html/comment-page-1#comment-366 the Cynical Investor Thu, 14 Jan 2010 01:40:58 +0000 http://investingincanada.info/?p=300#comment-366 Isn't it 'dangerous' to invest in an income trust ? They are going to lose their status in 2011. What will happen then ? Isn’t it ‘dangerous’ to invest in an income trust ?
They are going to lose their status in 2011. What will happen then ?

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