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ARTICLE · 23 JULY 2008

The Proposed Income Fund-To-Corporation Conversion Rules

McCarthy Tétrault
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On July 14, 2008, the Minister of Finance released long-awaited draft legislation to amend the Income Tax Act (Canada) and enable the tax-deferred conversion of certain income funds (referred to as Specified Investment Flow-Through entities or SIFTs) as well as real estate investment trusts (REITs) into corporations.

CanadaTax
Douglas S. Ewens
Douglas S. Ewens
Frédéric Harvey
Frédéric Harvey
Robert McCue
Robert McCue
James Morand
James Morand
Robert Nearing
Robert Nearing
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On July 14, 2008, the Minister of Finance released long-awaited draft legislation to amend the Income Tax Act (Canada) and enable the tax-deferred conversion of certain income funds (referred to as Specified Investment Flow-Through entities or SIFTs) as well as real estate investment trusts (REITs) into corporations. The comments made below with regard to SIFTs also apply to REITs, though relatively few REITs are expected to convert.

A tax-deferred conversion to corporate form was promised in the wake of the October 31, 2006 announcement of a special tax applicable to most SIFTs after 2010 — one that would be comparable to the tax borne by corporations in similar circumstances.

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