Alberta to introduce limited liability for trusts

(March 25, 2004) The Alberta government says it will introduce legislation this fiscal year to limit liability for income trusts investors. The pledge came in the province’s annual budget, tabled yesterday.

Income trusts have become a significant part of Alberta’s business sector, the province notes, and are still gaining popularity.

“Market opportunities for income trusts have increased and the industry is growing throughout Canada,” the budget document states.

“The trust sector has asked several provincial governments to pass legislation explicitly confirming the limited liability provided to investors. This legislation would likely increase the potential for investment by institutional investors, including pension funds.”

The technical change would also enhance Alberta’s reputation as a business-friendly jurisdiction, the province says, noting that Nova Scotia is the only other province in Canada to limit liability for trusts, although the Ontario government has said it will take the same step.

In its budget, Alberta confirmed it would lower the province’s corporate tax rate to 11.5% from 12.5% and the small business rate to 3% from 4% effective April 1, a move the province says will save businesses $142 million.

“Businesses are not the only ones to benefit from tax changes this year,” said Alberta Finance Minister Patricia Nelson. “Thanks to indexing of our 10% single rate personal tax, Albertans will save $150 million in personal income taxes this year alone. Albertans pay the lowest personal and business taxes in the country.”

The province also said it would increase spending on health and education to more than $13 billion and commit a further $6.5 billion to capital projects.

BMO Nesbitt Burns senior economist Douglas Porter says persistently strong energy prices will help Alberta balance its books for the 11th consecutive year.

“Even with exceptionally conservative revenue assumptions, another raft of tax cuts and a chunky increase in operating spending, Alberta still expects a surplus of $303 million in the coming year,” Porter says.

“Overall, Alberta’s fiscal position is incredibly strong, and this budget simply reinforces that picture.”

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com