Canadian Income Trust


DEFINITION of 'Canadian Income Trust'

A type of corporate structure as designated by the Canada Revenue Agency that operates as a profit-seeking corporation. This type of company pays out all earnings to unit holders before paying taxes, and is usually traded publicly on a securities exchange. In 2011 all Canadian income trusts lost their special corporate tax privileges, and were required to be converted into traditional corporate structures.

BREAKING DOWN 'Canadian Income Trust'

Canadian income trusts are a beneficial corporate structure alternative for firms due to lower tax liabilities. Before the profit is taxed, an income trust passes a high percentage of earnings to unit holders as cash distributions. If, once expenses have been covered, all of a firm's remaining cash is paid out to unit holders, the firm is able to entirely avoid paying income tax. This was stopped by January of 2011 for income trusts with the exception of real estate investment trusts (REITs).

  1. Real Estate Investment Trust - ...

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  2. Income Participating Security - ...

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  3. Life Income Fund - LIF

    In Canada, a type of registered retirement income fund that is ...
  4. Earnings Before Tax - EBT

    An indicator of a company's financial performance calculated ...
  5. Capital Cost Allowance - CCA

    A yearly deduction or depreciation that can be claimed for income ...
  6. Canada Revenue Agency - CRA

    A federal agency that collects taxes and administers tax laws ...
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