Royalty Trusts & Taxation

by Tax Guy - Burlington Accountant on January 9, 2009 Print This Post Print This Post

Question: I am interested in investing in a Canadian Royalty Trust (ERS-UN.TO) and would like to know how I will be taxed on dividends received from the trust.

Normally real estate investment trusts (REITs) do not pay dividends as they are not corporations. Thus the income received from the trust would probably be straight income.  The REITs website should disclose the nature of the distributions.

Trusts do not pay dividends but rather pass income earned to unit holders in the form originally received.  The treatment is similar to a mutual fund.  However, without knowing the trust, its difficult to determine the treatment of distributions.  It would be advisable to look at the trusts website and distribution history.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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