"This is something the industry has been pushing for the better part of a year in public testimony and private discussions," commented George Kesteven, Chairman of CAIF, in reaction to the government's announcement earlier this week.

"The guidelines for conversion and the details contained in (the) announcement are complex and have been a long-time coming. We intend to analyze the legislative amendments fully to ensure they are providing the information necessary for our members to make informed decisions," he added.

Minister of Finance Jim Flaherty announced on Monday that draft legislative proposals have been brought forward regarding new income tax rules to facilitate the conversion of specified investment flow through (SIFT) trusts into corporations. Flaherty stated that the rules reflect the government’s commitment to ensure that existing SIFTs can choose to reorganize as corporations "without undue tax effects."

"We are guardedly optimistic that these guidelines will provide income trusts with the clarity they so desperately need to make structural decisions going forward," Kesteven continued.

"For income trusts wishing to consider conversion, this should assist in determining how best to serve both their unitholders and management," he concluded.

On 31st October 2006, Flaherty announced that income trusts would have to pay a new tax in order to stem a "growing trend toward corporate tax avoidance" caused by the vehicle's more favourable tax treatment compared with the conventional company structure.

Trusts that had converted before this announcement have until 2011 to adjust to the new rules. However, conversions undertaken after the announcement immediately fell into the new tax regime, causing uproar in the business and investment sector, which complained that the new rules had been devised without consultation and had thrown well-advanced corporate reorganisation plans into chaos.