Glen Breaks's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/307435/comments http://seekingalpha.com/article/108123-canadian-royalty-trusts-in-need-of-an-american-revolution?source=feed#comment-324049 324049
It's a hoot with the selfproclaimed ToughGuy Harper getting the Queen's rep to lock the doors of Parliament so that he doesn't get turfed form his job over the next couple of months. Then there is the strange agreement between the three oppostion parties. It maybe isn't all that strange though given that Harper was trying for the same setup in 2004 when he wanted to knock the liberals out of power.
In addition, in this case, Harper really put a gun to the heads of the opposition parties and this was their only defence. It might work yet!

Anything could happen, the Tories could get a new leader, looks like the liberals will get Iggy and we could have yet another election or even the dreaded coalition, though I think not likely.
There is still faint hope that the trust tax will get killed, but only if Harper and flaherty go.

Glen


On Dec 01 12:24 PM longoil wrote:

> Glen,
>
> Have you been watching the news lately ? Harper caved in as I predicted
> and shelved his plan to cut $28 million in public subsidies that
> political parties receive for each vote.
>
> The scary part is the Liberals and NDP still want to topple the government
> and form a new government. I don't like Harper and his gang, but
> I despise the ultra left NDP and Jack Layton even more. Not only
> will Layton keep the scheduled 2011 removal of income trust structure
> in place, but he also insist on raising the corporate tax rate (and/or
> removing tax breaks for E&P) for these energy companies and reduce
> our dividend payments even more. It is not surprising that Layton
> and Obama are good friends.]]> Mon, 08 Dec 2008 14:46:27 -0500
It's a hoot with the selfproclaimed ToughGuy Harper getting the Queen's rep to lock the doors of Parliament so that he doesn't get turfed form his job over the next couple of months. Then there is the strange agreement between the three oppostion parties. It maybe isn't all that strange though given that Harper was trying for the same setup in 2004 when he wanted to knock the liberals out of power.
In addition, in this case, Harper really put a gun to the heads of the opposition parties and this was their only defence. It might work yet!

Anything could happen, the Tories could get a new leader, looks like the liberals will get Iggy and we could have yet another election or even the dreaded coalition, though I think not likely.
There is still faint hope that the trust tax will get killed, but only if Harper and flaherty go.

Glen


On Dec 01 12:24 PM longoil wrote:

> Glen,
>
> Have you been watching the news lately ? Harper caved in as I predicted
> and shelved his plan to cut $28 million in public subsidies that
> political parties receive for each vote.
>
> The scary part is the Liberals and NDP still want to topple the government
> and form a new government. I don't like Harper and his gang, but
> I despise the ultra left NDP and Jack Layton even more. Not only
> will Layton keep the scheduled 2011 removal of income trust structure
> in place, but he also insist on raising the corporate tax rate (and/or
> removing tax breaks for E&P) for these energy companies and reduce
> our dividend payments even more. It is not surprising that Layton
> and Obama are good friends.]]> http://seekingalpha.com/article/108123-canadian-royalty-trusts-in-need-of-an-american-revolution?source=feed#comment-317015 317015
He's now made it clear to all that his only interest in Canada is in gaining more power for himself. From a speech he made in the early days we know that he has no love for his own Country, only shame, calling it the "Great Northern European Welfare State and proud of it"


His antics this week show that the deteriorating world financial situation is no concern to him, it's just another excuse to put the boots to his political rivals.

Hopefully he will fall on his own sword and who knows, his sneaky and punitive tax on income trusts may be repealed by the next Government, as was promised by the Liberals had they won the election.


On Nov 28 11:07 AM longoil wrote:

> The Canadian conservative government might be tossed out as early
> as next week. They were recently reelected back as a minority government
> on October 14, 2008.
>
> This week they proposed a contentious 30 million dollar cut in the
> federal budget. This money would normally go to the opposition parties
> based on the number of votes they got during the last election. Obviously,
> the aim of the cut was to deprive his political rivals of funding
> and open the possibility for a majority conservative win.
>
> All opposition parties (Liberals, NDP, Green Party, etc) have vowed
> to vote against the budget which would lead to a non-confidence vote
> and toss Steve Harper and his cronies out 6 weeks after reelection.
> Unfortunately, I don't think it will come to this. Harper will probably
> back it out at the last moment.
>
> The name conservative is very misleading. The current conservative
> party is formed from old conservatives and an ultra-right faction
> called the reform party. Harper is true fascist and his tendencies
> has been demonstrated several times when fired government officials
> that have publicly disagreed with him including the head of the RCMP
> and Canada's nuclear safety watchdog.
>
> I hope the Harper and his sycophants get kicked out next week. I
> am still aching from the Halloween massacre of Income Trusts his
> government implemented after they said they would not touch them.
> ]]> Fri, 28 Nov 2008 22:54:57 -0500
He's now made it clear to all that his only interest in Canada is in gaining more power for himself. From a speech he made in the early days we know that he has no love for his own Country, only shame, calling it the "Great Northern European Welfare State and proud of it"


His antics this week show that the deteriorating world financial situation is no concern to him, it's just another excuse to put the boots to his political rivals.

Hopefully he will fall on his own sword and who knows, his sneaky and punitive tax on income trusts may be repealed by the next Government, as was promised by the Liberals had they won the election.


On Nov 28 11:07 AM longoil wrote:

> The Canadian conservative government might be tossed out as early
> as next week. They were recently reelected back as a minority government
> on October 14, 2008.
>
> This week they proposed a contentious 30 million dollar cut in the
> federal budget. This money would normally go to the opposition parties
> based on the number of votes they got during the last election. Obviously,
> the aim of the cut was to deprive his political rivals of funding
> and open the possibility for a majority conservative win.
>
> All opposition parties (Liberals, NDP, Green Party, etc) have vowed
> to vote against the budget which would lead to a non-confidence vote
> and toss Steve Harper and his cronies out 6 weeks after reelection.
> Unfortunately, I don't think it will come to this. Harper will probably
> back it out at the last moment.
>
> The name conservative is very misleading. The current conservative
> party is formed from old conservatives and an ultra-right faction
> called the reform party. Harper is true fascist and his tendencies
> has been demonstrated several times when fired government officials
> that have publicly disagreed with him including the head of the RCMP
> and Canada's nuclear safety watchdog.
>
> I hope the Harper and his sycophants get kicked out next week. I
> am still aching from the Halloween massacre of Income Trusts his
> government implemented after they said they would not touch them.
> ]]> http://seekingalpha.com/article/108123-canadian-royalty-trusts-in-need-of-an-american-revolution?source=feed#comment-316651 316651
Prime Minister Harper’s Government enacted a law that raised Canadian withholding tax on Americans and then raised taxes on the Canadian Royalty Trusts themselves starting in 2011. There was one notable exception to the withholding: Canadians who hold the Trust Units in an approved pension or retirement account could avoid the withholding increase

If you are referring to post 2011, this is not so, in fact my retirement account is the account that will get hit with the full tax, which will be in the 25 to 30% range.
On the other hand my non-registered account will not get hit at all.

The way it works for Canadians is this:

After 2011 the CDN Government will tax the income of these trusts exactly the same way they do all other corporations, in fact most trusts will convert to corporations at that point or before.
This means that ,all other things such as commodity prices being equal, the distributions paid out to the individual investor will be smaller by the amount of this tax, expected to be roughly 25%.

The good news is that those Canadians receiving these distributions or dividends (as they will be termed after 2011) in non-registered accounts will receive a tax credit worth about the same amount as the 25% tax.

This is the same way that all dividends from Canadian Corporations are treated now. This means that we while we will get a smaller distribution than prior to 2011, the new distribution will be tax free, so the post 2011 bottom line for non-registered accounts is almost identical to what it is now.

For the retirement accounts you mentioned, there is no avoidance of the new tax, the tax credit cannot be used. In these accounts we will simply receive 25% smaller distributions after 2011. When these funds are drawn from the account they will be fully taxable, so for these accounts, this is really double taxation of the same income.


It is somewhat of a complicated situation, so I hope my explanation clears things up.

Yes, there are differences in the way US and Canadian investors are treated here, but there also were differences in place before this new tax. I won't go into all of those details because it would take up too much space, but I will say that there are also differences in the tax treatment of my US stock dividends versus the way the same income is treated in the hands of a US investor.




On Nov 26 03:50 PM steve Ward wrote:

> I have never owned any Canroys but two which I;m happy with. They
> are Canadian Oil Sands Trust and Crescent Point. I do not paint all
> Canroys with a tainted brush, just 90 percent of them.
>
> In response to Glen Breaks: Your perspective and benefits are from
> the Canadian perspective not the American perspective. Our situation
> will be different in units held in an approved IRA or 401K as it
> currently stands. Also, the US government allows a tax credit for
> the 15 percent withholding but after 2011 is the large question.
> While Obama may not raise taxes his administration certainly will
> not advance credits for the investor class.
> As far as inaccuracies go just read Penn West's 2007 annual report
> I quoted it in my previous article. If you are a Canadian you are
> fine, if you are not you are a second class investor.
> ]]> Fri, 28 Nov 2008 10:01:02 -0500
Prime Minister Harper’s Government enacted a law that raised Canadian withholding tax on Americans and then raised taxes on the Canadian Royalty Trusts themselves starting in 2011. There was one notable exception to the withholding: Canadians who hold the Trust Units in an approved pension or retirement account could avoid the withholding increase

If you are referring to post 2011, this is not so, in fact my retirement account is the account that will get hit with the full tax, which will be in the 25 to 30% range.
On the other hand my non-registered account will not get hit at all.

The way it works for Canadians is this:

After 2011 the CDN Government will tax the income of these trusts exactly the same way they do all other corporations, in fact most trusts will convert to corporations at that point or before.
This means that ,all other things such as commodity prices being equal, the distributions paid out to the individual investor will be smaller by the amount of this tax, expected to be roughly 25%.

The good news is that those Canadians receiving these distributions or dividends (as they will be termed after 2011) in non-registered accounts will receive a tax credit worth about the same amount as the 25% tax.

This is the same way that all dividends from Canadian Corporations are treated now. This means that we while we will get a smaller distribution than prior to 2011, the new distribution will be tax free, so the post 2011 bottom line for non-registered accounts is almost identical to what it is now.

For the retirement accounts you mentioned, there is no avoidance of the new tax, the tax credit cannot be used. In these accounts we will simply receive 25% smaller distributions after 2011. When these funds are drawn from the account they will be fully taxable, so for these accounts, this is really double taxation of the same income.


It is somewhat of a complicated situation, so I hope my explanation clears things up.

Yes, there are differences in the way US and Canadian investors are treated here, but there also were differences in place before this new tax. I won't go into all of those details because it would take up too much space, but I will say that there are also differences in the tax treatment of my US stock dividends versus the way the same income is treated in the hands of a US investor.




On Nov 26 03:50 PM steve Ward wrote:

> I have never owned any Canroys but two which I;m happy with. They
> are Canadian Oil Sands Trust and Crescent Point. I do not paint all
> Canroys with a tainted brush, just 90 percent of them.
>
> In response to Glen Breaks: Your perspective and benefits are from
> the Canadian perspective not the American perspective. Our situation
> will be different in units held in an approved IRA or 401K as it
> currently stands. Also, the US government allows a tax credit for
> the 15 percent withholding but after 2011 is the large question.
> While Obama may not raise taxes his administration certainly will
> not advance credits for the investor class.
> As far as inaccuracies go just read Penn West's 2007 annual report
> I quoted it in my previous article. If you are a Canadian you are
> fine, if you are not you are a second class investor.
> ]]> http://seekingalpha.com/article/108123-canadian-royalty-trusts-in-need-of-an-american-revolution?source=feed#comment-315553 315553
The big change for us is that in 2011 the Government will tax these trusts at the Company level which means the distrbutions will likely be cut by about 25% or so. For the non-registered Canadian account this means little or no change to the bottom line as the new smaller distribution will now(after 2011) come with a tax credit which makes the distribution tax free.
For CDN registered accounts the tax credit cannot be used, so these are the accounts that will suffer. They will simply receive 25% less in distributions.

Of course I agree that the decision to tax these trusts was awful, especially after all of the promises made by Harper while campaigning.
By creating this trust tax Harper has made a lot of money for various foreign owned private firms (many in the US) who have been able to come in and grab these assets for pennies on the dollar. This was made possible for them by the huge drop in value of the trusts after Haper announced his tax. I do not believe that this was an "unintended consequence" as some have suggested, I think that this tax ahs been carefully planned out to do exactly what it has done.

Interestingly, once the assets are taken over by these foreign companies, no tax will ever be paid to Canada, exactly the reverse effect to that which the Government claimed the new tax would have.


On Nov 26 10:49 AM steve Ward wrote:

> In response to money leaving Canada, what did they expect comming
> here and asking for American capital.
>
> If Americans write one paragraph to Obana in any sizeable number
> it may have an action un anticipated by the doubters. Canada will
> not sell her oil to anyone but us. The Canadians know where the largest
> market in the world is.]]> Wed, 26 Nov 2008 11:32:44 -0500
The big change for us is that in 2011 the Government will tax these trusts at the Company level which means the distrbutions will likely be cut by about 25% or so. For the non-registered Canadian account this means little or no change to the bottom line as the new smaller distribution will now(after 2011) come with a tax credit which makes the distribution tax free.
For CDN registered accounts the tax credit cannot be used, so these are the accounts that will suffer. They will simply receive 25% less in distributions.

Of course I agree that the decision to tax these trusts was awful, especially after all of the promises made by Harper while campaigning.
By creating this trust tax Harper has made a lot of money for various foreign owned private firms (many in the US) who have been able to come in and grab these assets for pennies on the dollar. This was made possible for them by the huge drop in value of the trusts after Haper announced his tax. I do not believe that this was an "unintended consequence" as some have suggested, I think that this tax ahs been carefully planned out to do exactly what it has done.

Interestingly, once the assets are taken over by these foreign companies, no tax will ever be paid to Canada, exactly the reverse effect to that which the Government claimed the new tax would have.


On Nov 26 10:49 AM steve Ward wrote:

> In response to money leaving Canada, what did they expect comming
> here and asking for American capital.
>
> If Americans write one paragraph to Obana in any sizeable number
> it may have an action un anticipated by the doubters. Canada will
> not sell her oil to anyone but us. The Canadians know where the largest
> market in the world is.]]>