On December 16, 2010, the Department of Finance
("Finance") announced proposed
amendments to the rules in the Income Tax Act (Canada)
applicable to real estate investment trusts (the
"Qualifying REIT Rules"). The amendments
address certain concerns that real estate investment trusts
encountered when attempting to restructure their operations to
comply with the existing Qualifying REIT Rules. The amendments also
clarify, and in some respects restrict, the scope of the existing
exception for qualifying real estate investment trusts
("Qualifying REITs").
Background
Qualifying REITs are exempt from the new entity-level tax
generally imposed on publicly-traded income funds and partnerships
commencing January 1, 2011 (the "SIFT
tax"). Public trusts established after October 31,
2006 (and public trusts that exceeded certain equity growth
restrictions after that time) are already subject to the SIFT tax
rules and, therefore, must be Qualifying REITs in order to
