An innovative, engineered, tax structure, from the mid-1980s through to 2005. When a corporation converted itself into an income trusts, its shareholders benefitted from a lower tax rate. The Martin Liberal government ended the practice in 2005, drawing controversy and opposition from investors – particularly retirees.
In an unexpected development during the 2005 Christmas Holiday break – the midway point of the 2006 election campaign – at the request of a New Democratic Party MP, the RCMP released a letter that it was investigating potential insider trading in the Department of Finance,1 by officials who may have profited from advance knowledge of the income trust rule changes. The RCMP letter hit the campaign like a bombshell, and was seized by the opposition as fresh evidence (on top of the Sponsorship Scandal) of Liberal corruption.
The Liberals weren’t the last party to feel the political sting of Income Trusts, however. Once elected to office, the Harper Conservatives, contrary to their campaign rhetoric, completed the elimination of Income Trusts, resulting in considerable rancour and opposition from the same vocal investors that bedevilled the Martin government.
Image Source: Sean Kilpatrick, Maclean’s
- RCMP to investigate allegations of income trust leak. CBC Digital Archives.
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