Commander Cricket>
Take note. US owners of Canadian trusts don't need friends like the PDS as they advocate that we be taxed more. Just like I predicted a few weeks ago, discrimination against American investors will intensify. I expect those here who have not sold, soon will. If not, they are likely to endure substantial losses. US owners of trusts own major proportions of most trusts, so the selling may not be orderly.
Good luck if you continue to hold PGH....
wp
Paste>Let U.S. investors take trust tax hit, Ottawa urged Precision Drilling boss says that's easiest way to resolve Canadians' concerns
By DAVE EBNER
00:00 EST Tuesday, November 01, 2005 Page B8
CALGARY -- The easiest answer to the trust taxation question is to increase the burden on investors from the United States, says the chief of Precision Drilling Corp., whose shareholders approved a trust conversion yesterday.
Hank Swartout, Precision Drilling chairman, president and chief executive officer, said U.S. investors holding Canadian trusts face a far lower tax bill than Canadian investors.
"U.S. shareholders win big-time with the trusts. A 15-per-cent [with]holding tax, I mean we're paying 40 per cent as a person, why should they have 15 per cent?" Mr. Swartout told reporters after a 10-minute meeting to approve the Precision conversion.
"Let's be realistic, something has to come to pass sooner or later to handle that, wouldn't you agree?" he said. "It's just kind of basic."
About 93 per cent of votes cast by shareholders supported Precision's conversion to a trust. About four million shares -- 7 per cent of the total -- were cast against, and about 20 per cent of those are held by Ontario Teachers Pension Plan, which last week said it was against the conversion.
In the intensifying debate over the tax status of trusts -- which now are mostly untaxed -- the idea of increasing the tax burden on U.S. investors has been the one solution that many people have agreed upon, including those in the trust business.
It is a viable option for Ottawa, which has expressed concern about revenue lost through "tax leakage," though implementing it could be tricky. Article 22 of a 1980 tax treaty between Canada and the United States indicates that income from trusts cannot be taxed at more than 15 per cent. However, Canada could tax distributions from trusts that have been classified as return of capital rather than as income.
Mr. Swartout didn't have a comment on what would happen to Precision Drilling Trust -- set to begin trading Nov. 7 -- if the federal government imposes taxes on trusts.
"There's some things being thought of and said, but I have no idea what's going to happen. I certainly can't read Ottawa's mind," Mr. Swartout said.
Gene Stahl, president of Precision Drilling Trust and Mr. Swartout's son-in-law, said the risk of taxation had been considered. "The board evaluated that, and decided that we would carry forward with the trust," Mr. Stahl said to reporters. |
