The idea is even seen in the more recent shift towards buybacks instead of dividend payments. Governments are great at creating tax loopholes and fixing them with more tax loopholes. Unless the government is actively talking about changing the rules,has campaigned on it, or the rule becomes a PR nightmare, I think it is best to invest in the present and do what is most tax efficient right now.
For anyone considering Horizons Swap ETFs, it is worth noting that the 2019 Liberal budget *may* have a serious impact on their tax status:
https://www.horizonsetfs.com/news/Press-Release/Horizons-ETFs-Assessing-Impact-of-Proposed-Federal
There is a moneysense article, too. (that references the Horizon's release above)
A globe and mail article about the tax reform requires a subscription but the title looks good.
From the Moneysense Article: March 19 2019
2019 federal budget was released on March 19th.
The Budget suggested there will be changes on how swap-based ETFs (like HXT), designed to curb “unfair tax advantages” accruing to taxable investors using so-called Total Return ETFs that don’t hold securities directly but use a swap structure to defer or convert highly taxed dividend income (from qualified Canadian dividends) into lower-taxed capital gains. Horizons ETFs Management, maker of HXT and 14 other total return ETFs, said it is assessing the impact but that the changes won’t take effect until after the 2019 tax year. “It is proposed, not passed,” said Mark Yamada, “...
...PWL’s Ben Felix maintained his skepticism of the swap-based structure: “Passed or not, we now know that the regulatory risk is real.”..
....Yves Rebetez is also cautious about HXT: “ETFs should always preferably be underpinned by the assets they are meant to provide exposure to. When that is not the case, surprises can occur, such as the latest in relation to Total Return swap-based ETFs, where the structure itself is now challenged due to ‘unfair’ tax advantages.The bolded parts are my emphasis.
I do like the underlying ETF's, but there should be ample registered room for most people to take advantage of these by tax efficient allocations, without requiring the SWAP attributes. Eligible dividends up to a person with $46k income is also not taxed, so SWAPS are an advantage to people with very large portfolios (larger than room in registered plans) generating a lot of total income each year.
This seems to be a particular target group of people to tax for the liberal government, as they look for ways to pay for their greatly increased CCB and other reforms that have been passed. My money is on the SWAP Etf's losing a lot of their current tax value in this format.
I think back to when the REIT tax structure was originally changed, and how that impacted a lot of retired seniors (with investments) at that time. That was with a conservative government, too.