On July 14, 2008 the Minister of Finance (Canada) released the long anticipated draft legislation and accompanying explanatory notes in connection with the conversion of SIFT trusts and SIFT partnerships into corporations. The draft legislation takes into account the different ownership structures used by income trusts. The principal benefits of the trust conversion rules are that they minimize the administrative burden of individual tax filings otherwise required to facilitate tax deferral, and address some of the technical issues needed to rationalize the income trust structures. Both alternatives, discussed below, provide a 60 day window for completion of the conversion process, and given those time limits, the commercial exigencies of the conversion process will, in each case, have to be carefully examined.

type Tax Law Bulletin - August 2008 - Canada Facilitates Conversions of Income Trusts to Corporations