New amendments to income tax legislation are expected to reduce delays in the issuing of tax information slips relating to distributions made to investors by publicly traded income trusts and investment partnerships.

The draft regulations announced this past summer by federal Finance Minister Jim Flaherty require publicly traded trusts and partnerships to disclose information concerning distributions of income and capital within 60 days of the end of the year. Previously, trusts and partnerships faced a 90-day deadline.

Under the 90-day regime, brokerage houses and mutual fund companies often had to wait for income trust and partnership tax information, then scramble to prepare their own T3 and T5013 tax slips for clients in time for clients to meet April 30 tax-return filing deadlines.

Every year, fund companies must send out T3 and T5013 slips to their clients reflecting the income they have received from their mutual fund units, including capital gains, interest, dividends and return of capital from all investments held in a fund.

Brokerage houses typically send out consolidated statements to their clients each year, showing the income they have earned on their investments. The information must be sent to clients within 90 days of the calendar yearend, a deadline that is difficult to meet if these institutions don’t receive all the information they need well in advance.

“The delays have been a problem for a long time,” says John Parker, vice president and chief financial officer at the Investment Funds Institute of Canada in Toronto. “The process currently doesn’t allow information to get to inves-tors on time. It would be great if the deadline was moved up, and the investment industry could have the information a month earlier.”

Many mutual funds specialize in assembling diversified portfolios of income trusts, but even those that specialize in equities or fixed-income often hold a smattering of income trusts in the mix.

Income trusts and publicly traded partnerships can make the earlier disclosure 60-day deadline by posting details on the Web site of CDS Innovations Inc. , a subsidiary of Canadian Depository for Securities Ltd. , according to details of the proposed legislation released by the Department of Finance.

Investment firms and mutual fund companies may then use this information to prepare the information slips that they, in turn, are required to issue to their clients and unitholders within 90 days of the end of the calendar year. For publicly traded trusts and partnerships that invest in other trusts and partnerships, the new deadline for filing information on their distributions would be within 67 days of the end of the calendar year.

“Most fund companies have a quick turnaround — once we get the information we need — in terms of getting our slips out to brokers and clients,” says Carol Bezaire, vice president of tax and estate planning at Mackenzie Financial Corp. in Toronto. “The income trusts and partnerships will have to tighten what they’re doing and get their filings out faster. Many income trusts are held by seniors, and these people are often waiting for tax information slips so they can file their tax returns as soon as possible and get a refund. An earlier deadline is a good thing. It will be positive for everyone.”

Although the draft amendments were released in July, they await official passage into legislation. Jamie Golombek, vice president of tax and estate planning at AIM Funds Management Inc. in Toronto, expects compliance to begin this year, as the legislation will be retroactive to July once it’s officially passed.

The financial services industry is firmly onside. Lobbying efforts concerning this issue, which began in 2005, received unified support from various parties, including the Canadian Association of Income Funds, the Canadian Bankers Association, IFIC and the Investment Dealers Association of Canada. IE