Holders of CI Financial Income Fund units could be impacted by new tax relief measures announced by the federal Department of Finance in late November, CI has warned.

The new tax measures that were tabled in Parliament on Nov. 28 include facilitating the conversion of income trusts into corporations and improving income trust taxation rules, among others.

Since CI plans to convert from an income fund to a corporation, the new measures could have income tax implications for unit holders that are different than the fund previously disclosed.

First, CI said that unit holders would be able to transfer fund units to CI Corp., pursuant to certain sections of the Tax Act, in which case the automatic rollover provisions of the Tax Act would not apply.

Unit holders who do not opt for this transfer would be entitled to an automatic rollover. CI warned that in this case, holders may face tax consequences if the fair market value of a CI common share is different than that of a fund unit at the time of the exchange.

In addition, the new proposals mean that a capital loss otherwise realized by a fund unit holder could potentially be subject to a stop loss rule in the Tax Act. This would mean the capital loss otherwise realized by a unit holder would be denied and may only be recognized under certain circumstances.

Since the tax rules related to these changes are complex, CI encourages unit holders to consult their tax advisors to find out how they will be impacted.