Changes to income trust taxation

June 26, 2007 – Bill C-52, which includes changes to the taxation of Canadian income trusts, is now considered to be substantially enacted. Beginning in 2011, a new 31.5 % tax will be applied to distributions from Canadian public income trusts. Distributions would be considered dividends under the new rules, and would be eligible for the dividend tax credit.

In response to the income trust tax changes, Canadian Oil Sands has adjusted its financial plan. We have revised our net debt target to $1.6 billion from the previous target of $1.2 billion. The higher net debt target should allow the Trust to optimize distributions until the new tax rules take effect in 2011 and conserve tax pools. We will continue to evaluate our options as to the best structure for our Unitholders, which may include converting to a corporation.
For more information, please see the following links:

Federal Government’s October 31, 2006 announcement on income trust tax changes

Canadian Association of Income Trust Investors

Canadian Association of Income Funds

Coalition of Canadian Energy Trusts