November 2005


On November 23, 2005, the Minister of Finance abruptly ended the recently announced consultation process on publicly-listed flow-through entities and announced the government's intention to address the concerns by reducing the tax burden on corporate dividends in order to level the playing field between public corporations and income trusts. It was also announced that the Canada Revenue Agency would resume providing advance tax rulings on flow-through entity structures.

The reduction in the tax burden on dividends will be implemented by providing for an enhanced dividend tax credit for individuals commencing in 2006 which, if similar amendments are made in Ontario, will effectively reduce the current top rate of tax on dividends for an individual resident in Ontario from approximately 31% to 21%.