My colleague, Scott Ronalds (last seen on the beach in Hawaii), has written some comments on the tax changes of last week. Here they are:

Finance Minister Flaherty's Halloween announcement that income trusts will lose their tax advantaged status by 2011 has dominated the talk in financial circles and the financial press over the past week. However, along with the trick came a nice treat that seems to have been brushed over, as investor attention is still focused on the trust fallout. Starting next year, Canadian pensioners aged 65 or over will be able to split the income they receive from corporate pension plans, RRSPs and RRIFs. Up to now, Spousal RRSPs were the only widespread income-splitting tool available to Canadians (couples are also permitted to split their CPP benefits, but these represent a fairly modest portion of most couples' retirement income).

Under the current system, retired couples with disproportionate sources of retirement income are at the mercy of the taxman, as each spouse has to pay tax, at their marginal rate, based on the income they receive from the registered plans and pension plans held in their name. The individual drawing the higher income is therefore stuck with a much higher tax rate than their spouse. Going forward, couples who draw heavily on pension income will be able to largely split their income and lower their overall tax bill.

The changes will not benefit everyone - single individuals and couples who already draw similar retirement incomes will still be in the same tax bracket (although they will benefit from an increase in the age credit). Nonetheless, any retirement income splitting opportunities are a step in the right direction.

The treat still remains in the shadows of the trick. Jonathan Chevreau and others are doing their job to bring it to the public's attention, but investors are still largely focused on the aftermath of the income trust bomb. Halloween's over. It's time to put aside the horror and focus on the candy.