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Post by rationalinvestor on Sept 2, 2020 19:54:56 GMT
cookie Like thebigshort , I also assume you meant redemption? Here's how I understand it for non-RRSP accounts (doesn't really matter if it's in an RRSP). Don't take it as gospel - I still need to better understand a few things. - Although HE calls the monthly amount "dividends", the income is treated almost 100% as regular income. You can see that on the T5 they send you each year. The amount of regular income is equal to (or very close to) the amount of cash you would have received (or DRIP units, if you're doing that)
- The new structure was always intended to enable them to call the income on the HMIC regular income and on the HRAC a return of capital. There are other benefits too, as I understand it, but this was one of them
- I'm not sure why they need to do it this way. They can treat impaired assets differently in accounting under the current structure, and therefore attribute income/ROC to investors appropriately. I'll try to understand that better over the coming weeks. That's how it's done for a private REIT I've invested in.
- When redeemed, depending on how much over time was ROC vs income, the difference between what you get and par value will be treated as a capital loss (or in an ideal world, a gain 😉)
The original plan has since been changed to a revised MIC so I have to again get into the details (sigh)
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pat
New Member
Posts: 6
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Post by pat on Sept 2, 2020 20:39:36 GMT
I was okay with the share exchange plan last year and I agreed with the strategy of splitting the assets and manage them different. It made business sense, too bad it did not go through. Changing from MIC to trust structure doesn't seem to have a business motivation. Why is this necessary, what is in this for us, investors? rationalinvestor , I hope you can help, thx!
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