Two positive and painless adjustments to the federal government’s new policy on income trust taxation could remove the disadvantage currently faced by the country’s pension plans and put conventional firms and trusts on a level playing field, a paper from PricewaterhouseCoopers suggests.

PwC proposes two adjustments to the October 31, 2006, federal Tax Fairness Plan:

-Make the proposed tax on income trusts refundable to all Canadian investors(including pension plans and RRSP-holders)
-Eliminate double taxation by making the dividend tax credit fully refundable to all Canadian investors(including pension plans and RRSP-holders)

“Not only could we improve the fairness of the Canadian tax system, but also streamline the performance of our capital markets and provide our businesses with an opportunity for more disciplined capital reinvestment while helping them be more competitive,” the report said. “This can enhance returns for tax-exempt investors like pension funds and RRSP-holders,” the report said.

To view the report, click here.

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