Tommaso,
Thank you for your comments on OST. I was motivated by what you wrote and, after reading the Sedar filings and contacting OST by phone, I added OST to two portfolios.
I think it is important to understand OST's US tax status in order to best place it in a tax-sheltered account or taxable account.
AFAIKT, since OST, with a termination date, is a closed-end mutual fund is therefore unlike most of the CRTs which are not closed ended (ie do not have termination dates), thus it is like ES.TO in terms of US tax treatment.
ES.TO and OST_U.TO are both not DTC-eligible and are subject to tax on distributions in both tax-sheltered and taxable accounts, unlike DTC-eligible trusts, which most open ended CRTs are, which are not subject to withholding taxes in a sheltered account. I do not expect the DTC status of OST to change as it is closed-ended.
Therefore, while avoiding taxes on CG may be effective in a tax-sheltered account, during the term of OST (ie until September 2010) any distributions, which cannot be quantified at this time, would be taxed in both taxable and tax-sheltered accounts.
Also, based on what OST has told me, the trust may be extended for another term of undetermined length. While it is unclear what happens at the termination date (ie does the OST unitholder receive cash from liquidation of COS or pro-rated COS units or a combination?) there is the possibility that the unitholder may be able to continue to hold their units into the next term if extended. For this reason, OST would be less advantageous to hold in a sheltered account (since the extension may not trigger a taxable event) and aside from a small position in a sheltered account, I put most of my OST in a a taxable account.
I am sure each person has their own personal situation, and should consider this slightly more with OST than with an open-ended CRT due to DTC ineligibility.
David |
