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The tax expert who may have helped spur the government to crack down on income trusts by predicting that conversions to the structure would cost more than $1-billion in lost revenue believes that income funds are now destined to become an endangered species.

Jack Mintz, the University of Toronto professor who crunched those numbers, will join lawyer James Scarlett of Torys LLP and Sandy McIntyre, one of the country's largest trust investors, in Toronto to look at “The Future of Income Trusts — To Be or Not To Be.”

The general consensus at the moment — and Mr. Mintz's view — is that the likely outcome for most trusts is not to be.

A poll last week by the accounting firm Deloitte & Touche found that trust executives and advisers to the sector expect trusts to start disappearing before the end of the government's four-year tax holiday. The big reason it hasn't started yet is because Ottawa hasn't laid out the rules for conversions back to corporations, trust executives and advisers say.

“A lot of trusts in the end are going to move back to the corporate world to have more flexibility,” Mr. Mintz said. He said his call for a refundable dividend tax credit, which would make dividend-paying stocks more attractive, as well as for the ability of investors to exchange units for shares without triggering a capital gains tax hit would create even more incentive to convert to corporate status.

The other likely outcome for many trusts is being swallowed in a takeover, as private equity firms from the United States and abroad are drawing up lists of target companies and await only a further drop in prices before they strike.

The interest from private-equity firms is “huge,” and “there's going to be a lot of U.S. money coming in,” said Mr. Scarlett, who focuses on mergers and acquisitions in addition to trusts.

In a survey of 360 trust-sector managers, trustees, advisers, investors and lenders, Deloitte found that 87 per cent said the number of trusts will fall to 100 or fewer within four years from the current 256, and 52 per cent predicted no more than 50 trusts will be left by 2011.

“It's going to happen quite quickly,” said Deloitte vice-chairman James Goodfellow. For companies that need to raise capital to grow or replace declining assets “the issue is just give me the rules so I can understand the tax consequences of rolling back, for example, and as soon as I understand that, let's get on with it,” he added.

Income trust investors hoping for a bounce in valuation between now and the end of the tax holiday may also be disappointed, according to the survey's finding that 58 per cent of respondents believe the income trust index will fall further in the next four years.

Many trust investors blame Mr. Mintz in some way for the drops in their trust investments because of the massive publicity generated by his conclusion that, with the planned conversions of telecommunication giants BCE Inc. and Telus Corp. into trusts, the federal government stood to lose $1.1-billion in tax revenue because of the trust phenomenon.

Mr. Mintz's calculations have sparked a heated debate about what, if any, is the real number for lost tax revenue, and supporters of trusts have vigorously disputed his findings.

For example, Economist Yves Fortin, working on behalf of the Canadian Association of Income Funds, this month concluded in a paper that “it might well be that no tax leakage would be found if such a study was done properly.” The current government, for its part, hasn't released the numbers it has come up with.

One problem is that all such models rely on so many assumptions that a small change in one of the underlying assumptions (how much trusts pay out, for example) can vastly change the conclusions. “That's unfortunately the land of policy setting and macroeconomics — you build these big macro models and you tweak something and it's ‘Holy cow,'” Mr. Goodfellow said.