Specified Investment Flow-Through Tax - SIFT

AAA

DEFINITION of 'Specified Investment Flow-Through Tax - SIFT'

A tax implemented by the Canadian government on the distributions of a special type of Canadian income trust. SIFT trusts was a common business structure in Canada that provided beneficial tax advantages prior to 2006. They are actively managed and commonly used by businesses that essentially operate like corporations.





In October, 2006, the Canadian government decided that the tax advantages available to SIFT trusts were "not appropriate" (meaning that the government was not collecting as much tax revenue as it wanted to), and implemented a new tax under the Tax Fairness Plan that made SIFT taxation similar to corporate taxation.



INVESTOPEDIA EXPLAINS 'Specified Investment Flow-Through Tax - SIFT'

Prior to the imposition of the new tax, income trusts comprised roughly 10% of companies traded on the Toronto Stock Exchange, with a large number of those being energy companies. As a result of the change in tax law, many SIFT trusts converted to a corporate structure. The tax became effective for preexisting income trusts on January 1, 2011.

RELATED TERMS
  1. Dividend

    A distribution of a portion of a company's earnings, decided ...
  2. Specified Investment Flow-Through ...

    A type of income trust that holds publicly traded investments, ...
  3. Canadian Royalty Trust - CANROY

    An oil, gas or mineral company that is organized as a trust rather ...
  4. Trust

    A fiduciary relationship in which one party, known as a trustor, ...
  5. Income Trust

    An investment trust that holds income-producing assets and trades ...
  6. Partnership

    A business organization in which two or more individuals manage ...
RELATED FAQS
  1. How does the role of Medicare/Medicaid affect the drugs sector in the U.S.?

    Medicare and Medicaid have enormous influence on the pharmaceutical, or drugs, sector in the United States. For instance, ... Read Full Answer >>
  2. In what instances does overhead qualify for certain tax allowances?

    Businesses are just as keen as anyone else to keep their tax burdens low by any means possible. Overhead expenses often qualify ... Read Full Answer >>
  3. What are the ethical arguments against government subsidies to companies like Tesla?

    The ethical argument behind government subsidies is that they should be put into place to help industries that will, in turn, ... Read Full Answer >>
  4. How can tariffs cause inefficiencies in domestic industries?

    Any government regulation naturally creates inefficiencies in a pure supply and demand marketplace. When it comes to the ... Read Full Answer >>
  5. How are write-offs recorded on my tax return?

    The way your write-offs are recorded on your tax return varies depending on whether you are filing a personal or business ... Read Full Answer >>
  6. What do I do if I think an accountant is in violation of the Generally Accepted Accounting ...

    The Financial Accounting Standards Board (FASB) promulgates generally accepted accounting principles (GAAP) in the United ... Read Full Answer >>
Related Articles
  1. Savings

    Tax-Saving Tips For Canadian Taxpayers

    Find out how to get a bigger return.
  2. Forex Strategies

    Canada's Commodity Currency: Oil And The Loonie

    When the price of oil goes up, don't worry about how much gas is going to cost - get even by making a play on the Canadian dollar.
  3. Options & Futures

    Segregated Funds: Investment Protection For Canadian Citizens

    These funds contain the best of all worlds, providing opportunities for market growth with a no-loss guarantee.
  4. Options & Futures

    An Introduction To Canadian Income Trusts

    Yields in excess of 10% aren't rare, but these unique investments need to be chosen very carefully.
  5. Bonds & Fixed Income

    History Of The Toronto Stock Exchange

    Find out how the third-largest stock exchange in North America came to be.
  6. Retirement

    Estate Planning For Canadians

    Trusts, wills, taxes and rules differ by country. Find out what you need to know about estate plans in Canada.
  7. Retirement

    CDIC Protects Canadians From Bank Failure

    Bank failures can happen in Canada, but many deposits are insured. Find out what's covered.
  8. Economics

    Global Impact of China's Geopolitical Strategy

    China's geopolitical strategy is shifting the status quo from the Pacific to the Pentagon. Can the U.S. keep pace with Chinese military innovation?
  9. Economics

    3 Possibilities If Sanctions Against Iran Lift

    What would happen if sanctions against Iran were lifted?
  10. Taxes

    Are You Paying Too Much in Taxes?

    Overpaying taxes amounts to an interest-free loan to the government. Here are some ways to avoid that scenario.

You May Also Like

Hot Definitions
  1. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  2. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  3. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  4. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  5. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
  6. Grandfathered Activities

    Nonbank activities, some of which would normally not be permissible for bank holding companies and foreign banks in the United ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!