Halloween Massacre

AAA

DEFINITION of 'Halloween Massacre'

Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, announced that all income trusts would be taxed in a similar manner as corporations at a rate over 30% on taxable income, causing unit holders' values to decrease dramatically virtually overnight.

INVESTOPEDIA EXPLAINS 'Halloween Massacre'

Income trusts, which were permitted to make distributions to unit holders on a pretax basis under old Canadian income tax laws, were a popular investment vehicle in the early 2000s, especially in Canada. The Canadian energy sector was hardest hit by the change, and suffered an estimated loss of about $35 billion to investors, giving rise to the term "massacre".

This change in the Canadian tax law, which was largely debated after the fact, was made to remedy a perceived loss of tax revenue.

RELATED TERMS
  1. Tax Exempt

    To be free from, or not subject to, taxation by regulators or ...
  2. Canada Revenue Agency - CRA

    A federal agency that collects taxes and administers tax laws ...
  3. Income Trust

    An investment trust that holds income-producing assets and trades ...
  4. Cash Distribution Per Unit - CDPU

    A measure, used in Canada, that refers to the amount of cash ...
  5. Distributable Net Income - DNI

    In the case of an income trust, an amount that is transferable ...
  6. Canadian Income Trust

    A type of corporate structure as designated by the Canada Revenue ...
Related Articles
  1. Changes In Tax Legislation And Regulation
    Taxes

    Changes In Tax Legislation And Regulation

  2. Tax-Saving Tips For Canadian Taxpayers
    Savings

    Tax-Saving Tips For Canadian Taxpayers

  3. Haunting Wall Street: The Halloween ...
    Options & Futures

    Haunting Wall Street: The Halloween ...

  4. Are fringe benefits direct or indirect ...
    Taxes

    Are fringe benefits direct or indirect ...

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center