News Releases

BMO Financial Group is pleased with Finance Minister Ralph Goodale's announcement that the government will reduce taxes on dividends and not impose a new layer of taxation on income trusts or unitholders. 

"By our yardstick, the Minister of Finance has come to the best public policy outcome, and for that he deserves credit," said Yvan Bourdeau, president and chief operating officer of BMO Nesbitt Burns.  "We believe the government's action will help level the playing field between corporations and income trusts."

On November 10th, BMO Financial Group became the first major financial institution to make public its submission to the federal government's consultation.  In the submission, BMO said well-functioning capital markets are the key to economic efficiency and prosperity, and an even-handed tax regime is a prerequisite. 

"This new policy should enhance efficiency, competitiveness, integrity and stability in capital markets and economic and financial systems," said Mr. Bourdeau. 

"The real problem with the tax system was not the tax treatment of FTEs, but rather the discriminatory tax treatment of income earned in public corporations that is distributed as dividends," added Rick Egelton, senior vice-president and chief economist, BMO Financial Group.  "The double taxation of corporate earnings - once in the hands of the corporations and a second time in the hands of shareholders when they receive dividends - has been a fundamental source of unfairness in the system."

In its submission, BMO had recommended that the Department of Finance:

• reaffirm its support for the FTE structure in order to end the uncertainty in capital markets; and
• equalize the tax treatment between trusts and corporations by, as its fiscal position allows, enhancing the dividend tax credit as expeditiously as possible.

BMO also noted that any policy changes should be guided by five principles:

• the FTE structure is a viable choice for many businesses;
• the playing field between corporations and FTEs should be level;
• businesses should have the freedom to choose the most appropriate structure for their particular circumstance;
• there should be a minimum of government intervention around choice of business structure; and
• the international competitiveness of our tax system is a necessary and critical element of ensuring that Canada remains a prosperous nation.

Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization.  With total assets of $290 billion as at July 31, 2005, and more than 34,000 employees, BMO provides a broad range of retail banking, wealth management and investment banking products and solutions.  BMO Financial Group serves clients across Canada through its Canadian retail arm, BMO Bank of Montreal, and through BMO Nesbitt Burns, one of Canada's leading full-service investment firms.  In the United States, BMO serves clients through Chicago-based Harris, an integrated financial services organization that provides more than 1 million personal, business, corporate and institutional clients with banking, lending, investing, financial planning, trust administration, portfolio management, family office and wealth transfer services.

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