Specified Investment Flow-Through Tax - SIFT

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.



BREAKING DOWN '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. Specified Investment Flow-Through ...

    A type of income trust that holds publicly traded investments, ...
  2. Canadian Income Trust

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

    A levy placed on the profit of a firm, with different rates used ...
  4. Effective Tax Rate

    The average rate at which an individual or corporation is taxed. ...
  5. Taxes

    An involuntary fee levied on corporations or individuals that ...
  6. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. ...
Related Articles
  1. Personal Finance

    Understanding Taxes

    Taxes are mandatory fees that individuals and corporations must pay to their governments.
  2. Personal Finance

    A Concise History Of Changes In U.S. Tax Law

    We look at how U.S. taxes have changed since their inception.
  3. Personal Finance

    The Impact Of U.S. Corporate Taxation On Investment Decisions And CFC Transfer Pricing

    To avoid taxation, businesses do careful tax planning, taking into consideration more than one country's taxation system.
  4. Personal Finance

    Explaining Corporate Tax

    A corporate tax is a tax levied on the profits a corporation generates.
  5. Personal Finance

    Do Tax Cuts Stimulate The Economy?

    Learn the logic behind the belief that reducing government income benefits everyone.
  6. Personal Finance

    Tax Haven Vs. Tax Shelters: Is There a Difference?

    Learn about the difference between tax havens and tax shelters, and how both are used to reduce tax liability or avoid paying taxes altogether.
  7. Personal Finance

    The History Of Taxes In The U.S.

    The number of taxes that we now consider a given did not always exist. Find out how they arose.
  8. Retirement

    Should You Put Your Faith In A Trust?

    Many institutions want a piece of your portfolio, but trusts can provide a one-stop shop.
  9. Personal Finance

    Paying Uncle Sam: From Tobacco To $1 Trillion

    The services we rely on, like education, law and security, were built on taxes.
  10. Retirement

    How To Set Up A Trust Fund In Australia

    No, they're not just for the super-rich. But you need to know the rules.
RELATED FAQS
  1. What percentage of withdrawals from a trust fund is taxed?

    I have inherited a trust fund. This is the first time I have considered pulling money from the account.  ... Read Answer >>
  2. Will I have to pay taxes every year when I receive the $25,000 from my trust fund?

    My inheritance is in the form of a trust fund that distributes $25,000 per year for 10 years. ... Read Answer >>
  3. What is the difference between income tax and capital gains tax?

  4. Can a corporation deduct dividend payments to shareholders before taxes are calculated?

    Corporations may not legally deduct the dividend payments before taxes but there is another approach - a corporate structure ... Read Answer >>
  5. How are trust fund earnings taxed?

    Trust fund earnings that are distributed are paid by the beneficiary. The trust pays taxes on retained earnings and principal ... Read Answer >>
  6. Do beneficiaries of a trust pay taxes?

    Learn how interest income from a trust is taxed, and understand when this money is taxable to the trust and when it is taxable ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center