Canadian Royalty Trusts Lose Tax Advantage – Could Boost Interest in MLPs

Canadian Royalty Trusts or “CanRoys” are similar in structure and tax treatment to master limited partnerships in the US.  Like MLPs, they typically have high yields and are exempt from paying taxes at the corporate level.  Unfortunately for investors, the Canadian government has decided to put an end to the corporate tax exemption in 2011 (in order to capture more tax revenues).  This could boost interest in the US MLP space as investors look for the same tax treatment in other existing investments.