Halloween Massacre


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.

BREAKING DOWN '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.

  1. Distributable Net Income - DNI

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

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

    A measure, used in Canada, that refers to the amount of cash ...
  4. Tax Exempt

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

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

    A type of corporate structure as designated by the Canada Revenue ...
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