TELUS scraps income trust plan; BCE expected to follow suit

Canada’s second largest telephone provider TELUS Corp, announced on Friday that it has abandoned plans to convert itself into an income trust, because of the federal government’s recent decision to tax trusts in a similar manner as corporations. The company said in a statement: ‘TELUS management and board of directors believe that it is no longer in the best interests of the company and its shareholders to proceed with the reorganization…The board has unanimously decided to not proceed with the conversion. Bell Canada Enterprises (BCE), the largest telecoms company in eastern Canada, had also recently announced plans to become an income trust, but is currently reviewing that decision, and is expected to come to a similar conclusion as TELUS. Finance Minister Jim Flaherty stunned investors and businesses on 31 October by backtracking on a previous pledge to maintain trusts’ tax-exempt status.