A party, good ale and a leak - what's unusual?

Simplicity out of Complicity - the Income Trust Mish-Mash


Well, a certain pall has dropped over the Finance Department, the Prime Minister's Own Office, the Liberal party and all the fellers and gals who work therein.

Poor ol' Ralph Goodale has been asked to 'fall on his sword' for the good of the Liberal party and so far he seems reluctant to do so.

Nothing strange here really - seems to me every time there is a party, with good ale, there WILL be a leak sooner or later. (A little 'boys night out' pun, excuse me. )

At any rate, sometimes good can come from bad and every cloud has etc etc.

If we look at this Income Trust idea we see it as a new, wider application on Flow-Through shares used in the mining and oil exploration worlds. In this scheme, Designated Companies don't pay taxes on revenue in the 'normal way', they just flow-the-revenue-through to the shareholder.

It sort of eliminates one layer of taxation on the revenue.

The Toronto Star says the recent hub-bub is all about the Hon Mr Goodale making an announcement to not-cool-off (as he'd intimated earlier) on allowing regular companies to convert themselves into this type of "special tax treatment" entity.

At the same time Min. Goodale announced some other "special tax treatments" to dividend-paying companies to minimize the difference, to investors, between owning one or the other type of company.

Imagine you have two pet dogs, you tickle one, you must tickle the other, if one just happens to be new, young and cute, it is tempting to tickle it more, but the old faithful dog actually deserves the attention more.

It's like that.

Except when you hold yorself out to be Manager of the Canadian Economy and Head Administrator of the Simple, Fair, Efficient & Neutral Taxation system rather than just the owner of two pups, things get complicated.

Reminds me of the Ptolemaic system of demonstrating the planetary system with all sorts of reverse-spinning adjustments and back-flowing, counter-clockwise fiddly-diddles built into it to explain all the observable idiosyncrasies that didn't fit the accepted theory.

So, in the interests of both man and science why don't they make every company an Income Trust? or every firm just pay some simple straight percentage off the top or a bit bigger one of the bottom?

Then everyone would know how to figure the 'tax cost' into their investment decisions and we could put all those high-powered brains in accounting, tax planning and tax collection to work actually doing something.

Ah, my lunch is ready!