2011 Federal Budget—Qualifying Environmental Trusts

The federal Budget tabled on June 6, 2011 included no changes to the income tax measures originally announced in the Budget on March 22, 2011.

The qualifying environment trust (“QET”) tax regime applies to certain trusts set up to fund future reclamations costs relating to mines, quarries and waste disposal sites. The Budget proposes that, beginning in 2012, the QET regime will apply to a trust set up to fund future reclamation costs relating to the property used in the operation of a pipeline. The Budget papers indicate that the extension of the QET regime to pipeline operations follows a National Energy Board (“NEB”) announcement that companies operating pipelines will be required to begin setting aside funds during a pipeline’s operating life to fund future reclamation costs associated with the pipeline’s abandonment. The QET trust will be available for this purpose. The Budget extends the QET rules to apply to a trust created after 2011 and mandated by order of a tribunal such as the NEB.

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