What is the Halloween Massacre?

In the investing world, the Halloween Massacre occurred in October 2006, when Canada began taxing all income trusts in the country.

How Does the Halloween Massacre Work?

Many oil companies created income trusts in Canada, and they issued popular high-yield securities. Before the change, the income trusts could distribute their profits to shareholders on a pretax basis.

After that date, the Canadian government began taxing the trusts like corporations and applied tax rates that were sometimes more than 30%, dramatically reducing the amount of the distributions to investors.

Why Does the Halloween Massacre Matter?

The Halloween Massacre was a big increase in tax revenue for the Canadian government, but it wildly devalued the investments and consequently decimated many investors' portfolios. According to one report, the Canadian energy sector lost $30 billion of value overnight.

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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

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