Here is my understanding of how this was supposed to work:
By the rules XYZ Incorporated would deduct the usual expences (wages,materials, vehicle cost and equipment costs). They would then declare whatever profit was left on their balance sheet.
By the rules of an Income Trust- XYZ Inc. would have to pay any profits out to the shareholders. XYZ would pay no TAX because they do not have a Taxable Income after paying the Shareholder's.
Jack Spratt-JS for short- purchases 1000 Shares of XYZ Inc. for $20 each plus total Brokerage fees of $100. He lays out $20,100. He receives a dividend payment in the first year from XYZ Inc. equal to a 10% profit on his Investment. Lets say JS is retired has no other Pension money, but is receiving OAS and CPP. Suppose his CPP is $800 per month.
Suppose he lives in Ontario.
JS Income for 2007 would be $19,552. He would receive the $100 Provincial Credit as a refund. He would be elligible for the supplement on OAS next year.
JS would not be living high on the hog certainly, but would have no medical expenses, would get Senior Bus passes, would qualify for Senior subsidized housing. He might not ever have to cash in his investment and may leave a nice cash gift for his survivors.
MY Point...who is going to pay for this? If the Corporations pay no Tax and the Indivdual Shareholder pays no Tax, just who is going to have to fork over to keep the system afloat?
Am I missing something here? Wasn't it a GOOD THING!!!! that our Government took another look at this and decided it was Bad News for the majority and a fantastic windfall for people with money to invest.
Just who are the people complaining that our Government went back on a promise to honour Income Trust set ups? How many of them are just spouting off about something they have not thought through, and something that would have got the average wage earner in another vise of Tax to cover the rich guy's loop holes?
Feel free to tear this apart! I really do not understand why it might be a good thing. Where am I wrong?
By the rules XYZ Incorporated would deduct the usual expences (wages,materials, vehicle cost and equipment costs). They would then declare whatever profit was left on their balance sheet.
By the rules of an Income Trust- XYZ Inc. would have to pay any profits out to the shareholders. XYZ would pay no TAX because they do not have a Taxable Income after paying the Shareholder's.
Jack Spratt-JS for short- purchases 1000 Shares of XYZ Inc. for $20 each plus total Brokerage fees of $100. He lays out $20,100. He receives a dividend payment in the first year from XYZ Inc. equal to a 10% profit on his Investment. Lets say JS is retired has no other Pension money, but is receiving OAS and CPP. Suppose his CPP is $800 per month.
Suppose he lives in Ontario.
JS Income for 2007 would be $19,552. He would receive the $100 Provincial Credit as a refund. He would be elligible for the supplement on OAS next year.
JS would not be living high on the hog certainly, but would have no medical expenses, would get Senior Bus passes, would qualify for Senior subsidized housing. He might not ever have to cash in his investment and may leave a nice cash gift for his survivors.
MY Point...who is going to pay for this? If the Corporations pay no Tax and the Indivdual Shareholder pays no Tax, just who is going to have to fork over to keep the system afloat?
Am I missing something here? Wasn't it a GOOD THING!!!! that our Government took another look at this and decided it was Bad News for the majority and a fantastic windfall for people with money to invest.
Just who are the people complaining that our Government went back on a promise to honour Income Trust set ups? How many of them are just spouting off about something they have not thought through, and something that would have got the average wage earner in another vise of Tax to cover the rich guy's loop holes?
Feel free to tear this apart! I really do not understand why it might be a good thing. Where am I wrong?
