Tax

Canada Faces Income Trusts Challenge

Nick Parmee 5 November 2007

Canada Faces Income Trusts Challenge

The Canadian government is facing a North American Free Trade Agreement challenge by two American trust investors. Their claim is based on the decision in October 2006 to eliminate the tax advantages of income trusts over companies. The unexpected change caused investors losses of $35 billion according to some estimates; it is thought that American investors suffered over $5 billion of that loss. The claim is being made by a Chicago couple, Marvin and Elaine Gottlieb. They allege that the Canadian government discriminated against Americans when they imposed the new measures, in breach of the terms of NAFTA. They are seeking $6.5 million in damages they claim to have suffered as a result of the tax. "We are the first Americans to launch a NAFTA action related to the taxation of energy trusts," Marvin Gottlieb said in a statement.

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