TORONTO, March 20, 2019 /CNW/ - BMO Nesbitt Burns Inc. (the "Manager") is assessing the impact on certain investment funds that it manages of certain amendments to the Income Tax Act ("Tax Act") proposed by the Minister of Finance in the Federal Budget on March 19, 2019. Based on its preliminary assessment, the Manager has determined that, if the Tax Act were amended as proposed, the funds listed below (the "Funds") would be affected by the changes. In order to benefit from limited transitional relief, the Manager has suspended the distribution of the Funds until further notice and will not accept new purchase orders for the Funds until it completes its assessment of the proposed legislative changes and determines what further actions might be advisable.
If the proposed amendments were enacted as proposed, certain derivative agreements that the Funds have entered into will likely be treated as "derivative forward agreements" for tax purposes, which would increase the income of the Funds and may result in non-refundable tax payable by the TACTIC™ Funds or an increase in the amount of taxable distributions to be made to unitholders of the Q-Model® Funds.
The proposed amendments should not apply to existing derivative agreements of a Fund until after December 31, 2019 provided that the Fund satisfies the conditions for transitional relief. As stated, the Manager has suspended the distribution of the Funds in order that they may benefit from such relief. For this reason, the Manager does not anticipate any change to the tax treatment of the derivative agreements of the Funds for 2019.
If the Funds were to continue to carry on operations after December 31, 2019 in the same manner, the proposed amendments would likely result in an increase in the income of the Funds and may result in non-refundable tax payable by the TACTIC™ Funds or an increase in the amount of taxable distributions to be made to unitholders of the Q-Model® Funds, all else equal.
The Manager will provide an update after it completes its assessment of the proposed amendments and determines what additional actions may be advisable.
BMO Advantaged S&P/TSX Capped Composite TACTIC™ Fund
BMO Advantaged Equal Weight Banks TACTIC™ Fund
BMO Advantaged Equal Weight Oil & Gas TACTIC™ Fund
BMO Advantaged Laddered Preferred Share TACTIC™ Fund
BMO Advantaged Canadian Q-Model® Fund
BMO Advantaged U.S. Q-Model® Fund
Certain statements included in this news release constitute forward-looking statements, including, but not limited to, those identified by the expressions "anticipate", "expect", "intend", "will", "estimate" and similar expressions to the extent they relate to the Funds and the Manager. The forward-looking statements are not historical facts but reflect the current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Although the Funds and the Manager believe that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein. Neither the Funds nor the Manager undertake any obligation to update publicly or otherwise revise any forward-looking statement or information whether as a result of new information, future events or other such factors which affect this information, except as required by law.
SOURCE BMO Nesbitt Burns Inc.
For further information: BMO Capital Markets at 1.866.864.7760 (English) or 1.866.529.0017 (French).