John Heinzl's excellent article on income trusts

John Heinzl contributed an interesting article regarding income trusts to the June 18, 2010 edition of The Globe and Mail. In the column, he basically gives a state of the union update on income trusts and their conversions to corporations.

He describes the conversion process in the following statement: "As an income trust, a business can distribute its earnings to shareholders and thereby pay no tax. Concerned by what it described as tax leakage, the federal government announced that trusts would have to start paying taxes in 2011 (real estate investment trusts meeting certain conditions were excluded)."

He goes on to state: "Income trusts as we know them will largely be gone by the time a new trust tax kicks in next year. In their place will be a new category of stock that in some cases will be more attractive to some investors than trusts were."

"I’m calling it the high-yielding corporation," said Harry Levant, the independent analyst behind the IncomeResearch.ca website. “It’s a new beast that has come out of the income trust process and demand for income."

"At their peak, there were about 265 income trusts listed on the Toronto Stock Exchange. Takeovers and privatizations will reduce the total number of high-yield corporations to around 90, in Mr. Levant’s estimation."

The full article can be found at: A new investment beast: the high-yield corporation page.

Happy DRIPping,
Ken

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