As others have pointed out below, it's most definitely a retroactive change.  The worst part about this whole mess is that it could have been entirely avoided.  The Canadian government has claimed they were focused on future trust conversions.  Full grandfathering of existing trusts, with maybe some limitations on M&A activity would have been perfectly fine.  Instead, the government lashed out like some paranoid, cornered rat.  There is no nice way to describe what happened.  

Rules were established on what was legal business and investment relationships, and an additional pledge was made that such relationships would not be changed.  Granted, conditions change and sometimes governments need to make policy changes.  Fine.  But if their claim that they were worried about future trusts was true, a wide range of other options were available.  The finance minister even lied while attempting to justify his decision, noting that it was just discovered that major oil and gas companies were thinking of converting to the trust model.  Encana admitted this month that in 2005 it submitted to the finance ministry a proposal to convert into a trust.   I discussed some of these issues in an article I wrote about two weeks ago:  

http://www.financialsense.com/fsu/editorials/2006/1104.html

During the last couple of weeks I've spoken with analysts and executives.  The overwhelming feedback I've found has been dismay and frustration.  To be perfectly blunt, I don't think the Canadian government has a clue how much damage this will do to secondary recovery efforts in the oil and gas industry.  For a couple of years, we'll be going through a period of capital constriction, and oil and gas production is going to fall.  It'll likely be a "temporary" problem because eventually, attractive assets will be put into production within viable business organizations.  But the transition period is going to extend over a period of years and will be anything but smooth.  

It's really hard to try nail down estimates.  Something like 20% of Canada's oil and gas is produced by income trust companies, and much of this production is focused on secondary recovery efforts ideally suited for the trust business structure.  Maybe we're looking at a situation where some ten percent of this 20% figure will fall temporary victim to business organization transition?  I don't know.  Time will tell.  Other wrinkles are clear as well.  Many small E&P juniors could get seed funding and run viable exploration efforts given the role trusts played as an "exit strategy."  Take the trusts away and part of the exploration ecosystem is damaged.  Large companies like Encana don't have time to deal with small reserves and if the pool of ready buyers for the junior E&P market economy shrinks, the net exploration activity will eventually shrink as well.

Many analysts make convincing arguments that trusts did not pose a threat to net taxes receipts.  Even in the business trust arena, a great deal of productive economic enterprise blossomed as small and midsize companies were able to tap the equity market for the first time through the trust model.  The finance ministry would like Canadian's to believe that Canada was at risk of becoming an "income trust economy," and that productivity was going straight down the toilet.  That's hyperbole, at best.