Sunday, October 14, 2007

Kurt Wulff on Primewest takeover bid

Excerpt from McDep Associates research report:

Political Irony in Tax “Fairness”

Investors know to run the other way when political leaders talk about the “fairness” of proposed changes. Canada’s minority government ended the royalty trust tax advantage after 2011 to stem an imagined loss of revenue. Instead the measure discriminates against individual investors who want to exercise some control over their retirement in favor of institutional investors who can use opaque techniques to avoid taxes.

In the current takeover, we understand from the Financial Post that the buyer may set up the purchase as a 100% loan and then make distributions as interest. Apparently, interest payments would not be subject to corporate tax or to withholding tax on payments to non-Canadian entities.

Read the complete McDep report