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Highlights
ENERGY TRUSTS
Incorporation of an Energy Trust
Alycia Calvert
Notwithstanding the recent one-way
trend of corporations converting to energy trusts, in some respects this trend
could reverse given the prevalence of energy trusts and other business trusts in
the market today. With weakening natural gas prices and tight labour markets,
corporate acquirers may find energy trusts to be attractive takeover targets. As
Alycia Calvert explains, tax issues arise if the energy trust structure is
unwound after the corporate acquisition. With proper planning, the energy trust
structure can in some cases be unwound without additional tax arising. In other
cases, unwinding the energy trust structures cannot be achieved entirely free of
additional tax. However, in these latter cases, leaving the energy trust
structure in place would seem an equally viable alternative. In such
circumstances, the trust structure should not be considered a barrier to a
potential acquisition.
PROPOSED LEGISLATION
The Foreign Currency Election: an Australian Experience
Liam Fitzgerald
When the 2006 federal budget was
released on May 2, 2006, the Department of
Finance said it would release legislative proposals that would allow
corporations that are required for financial reporting purposes to report in a
functional currency other than the Canadian dollar to elect to determine their income for Canadian tax purposes in
that functional currency. As Liam
Fitzgerald explains, this could be an important development for Canadian
companies engaged in the mining industry. Australia enacted a similar proposal
in 2003. The Australian experience shows that the consultation period
contemplated by the Department of Finance will be important to address the
unique needs and issues facing these Canadian resource companies. As the author
notes, one objective must be to ensure that these companies do not realize
post-election exchange gains in circumstances where such gains would not match
the economic realities of the underlying transactions.
FINANCING STRUCTURES
Qualifying Environmental Trusts
Brian R. Carr
Qualifying Environmental Trusts
("QETs") were introduced to solve the problem of mining companies not being able
to deduct reclamation reserves. Unfortunately, QETs have been used far less
frequently than was initially anticipated, for both tax and non-tax reasons.
Nonetheless, as Brian Carr explains, QETs may have a bright future in the public
market to allow a mining corporation to
effectively renounce future reclamation expenses to investors.
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Board
Ian J. Gamble
Editor-in-Chief
Thorsteinssons LLP
Brian R. Carr
Fraser Milner Casgrain LLP
John A. Chan
Ernst & Young LLP
John Gravelle
PricewaterhouseCoopers LLP
Barry D. Horne
McInnes Cooper
Claude E. Jodoin
Fasken Martineau DuMoulin LLP
Doug Richardson
Blake, Cassels & Graydon LLP
D. Alan Ross
Bennett Jones LLP
David W. Ross
Burnet, Duckworth & Palmer LLP
Tom Stack
Hergott Duval Stack & Partners LLP |