Can anyone help me out with the latest

[CanadianGuitarist 0]

I've yet to see a fair report of this. The right is lining up to defend PM Stephen Harper and Finance Minister Jim Flaherty, and the left have been taking pot shots at them.

 

Amidst all of this, I don't know what the hell is going on. I don;t know a thing about investing or the applicable taxes. The jist of what happened, I understand, is that tax rules were re-written as it goes to investments and income trusts?

 

Basically....who wants to help me learn about investing, and why Wednesday's decision effected investing so drastically?

[CanadianChris 0]

In a nutshell (and to my understanding), business trusts were a tax loophole that allowed companies with minimal opportunity for growth to restructure themselves in such a way that profits were distributed to unitholders without being subject to corporate income tax.

 

The federal government rightly realized that too many large companies (including many growth industries) were restructuring their operations as income trusts. The final straw came when BCE (Bell Canada) announced its intentions to restructure as a trust. Faced with the prospect of every company on the TSE restructuring itself thusly, completely eroding the government's tax base, they had no choice but to close the loophole and start taxing trusts as any other corporation would be taxed.

 

Actually, from my wanderings around the internet on this issue, it's the right that are flaming the government over this, as the Conservatives actually sided against Bay Street and investors on this issue. Remember, the Liberals avoided making such a move last year before the election -- that was the issue that was leaked before it was officially announced by Ralph Goodale. Others are flaming the government based on the fact that they said during the election campaign that they wouldn't do this, but I give credit to the government that they realized that not breaking this promise wouldn't be in the public interest.

[CanadianGuitarist 0]

government that they realized that not breaking this promise

 

I heard this a lot during the last 24 hours. You can see how I'd be jaded.

 

But investments dropping by 50% yesterday? The dollar losing close to a whole cent? The sky's probably not falling, but you can see my overwhelmedness.

[CanadianChris 0]

The markets are dropping because everyone's rushing to get out of income trusts. Typical overreaction. It'll get back up once everyone calms down.

 

The dollar dropped because the move was seen as being unfriendly to investment in Canada. That'll level off too -- nothing to panic about yet.