







The world for Canadian trusts changed on Oct. 31, when Finance Minister Jim Flaherty proposed taxing them as corporations beginning in 2011. As was the case before the proposal was issued, the most-important factor for determining how profitable a trust will be remains its business. A trust that’s backed by a healthy business will fare well whether it has to pay corporate taxes or not. In contrast, trusts backed by weak businesses are doomed to fail no matter how favorable the tax regime.
Oil and gas producers have always been the most-volatile trusts. That’s now doubly true in view of the potential tax changes for trusts in 2011 and beyond. The good news is energy prices are bouncing back, energy trusts are dirt cheap and most have now adopted more conservative payout policies.
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—V.R.B., Tustin, CA
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