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Albert Zhou, MBA,CFP

资深保险理财顾问

探亲旅游保险专家

416-834-9204

zhouwanmao@hotmail.com

个人网站: http://www.azfinancial.ca

www.buyonemedical.com/albertzhou

Like many hard working canadians that save and invest their mediocre dollars every year, I witnessed several thousand dollars disappear from my investment portfolio. The announcements by the federal Finance Minister on tax investment trusts have left me confused. Are all trusts subject to tax? Can I split my rental property income and interest with my spouse, now that the new rules allow income splitting?——Carl, Toronto

I have received numerous emails concerning the tax effects of Mr. Flaherty’s “Tax Fairness Plan” on October 31st. Income trusts will be taxed on distributions at a similar tax rate as large Canadian corporations.

The proposed nex tax changes apply to specific Flow Through Entities (FTEs) known as ” Specified Investment Flow-Throughs” (SIFTs). Income trusts are considered SIFTs and therefore (with few exceptions) subject to the proposed new tax changes. Real Estate Investment Trusts (REITs) are an exception and excluded from teh new proposed tax changes. Surprisingly, investors in REITs may have observed an increase in their investment portfolio while most other investment trusts suffered declines. This can be directly attributed to REITs not subject to new tax rules.

Some investment advisors have noticed a shift of some SIFTs to REITs. REITs provide investors accesss to real estate without the normally large capital required and steady permanent steams of income earned through rents and property appreciation.

Currently, Canada Pension Plan (CPP) payments can be income split by a pensioner and his/her spouse. The proposed tax changes will allow individuals and their spouse over 65 years to income split “eligible pension income” that qualifies for teh pension income tax credit. Eligible pension income includies annuity payments from a Registered Retirement Savings Plan (RRSP), Deferred profit-sharing plan and payouts from a Registered Retirement Income Fund(RRIF). Individuls under 65 years old , that receive lifetime annuity payments from a RPP and certain other payments will also qualify to an income split. Rental income or interest will not qualify for the proposed income-splitting tax changes.

Although, investment trust should be considered in any investment portofolio, let’s not forget the first investment adage, “Don’t put all your eggs in one basket!” This saying continues to apply regardless if your personal choice is stocks, real estate or art.

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