Income trust market officially dead
This announcement from Finance Canada will mark the end of the publicly traded income trust market, effective 2011. This will also prevent Bell and Telus from converting to a trust.
Essentially what will happen is that trusts will not be allowed to deduct distributions to unitholders for income tax purposes. These distributions, however, will be considered taxable dividends to the unitholder, which receive preferential treatment.
Companies that are currently trading as income trusts will receive the existing tax treatment until 2011, while companies that convert in November and after will receive the new tax treatment. There now will be fundamentally nothing different between a corporate earning income and giving out dividends to shareholders versus a trust distributing to its shareholders.