Everything You Need to Know on Friday: TC Energy Eyes Data Centre Growth as Potential Opportunity

Good morning mooers! Here are things you need to know about today's market:

● S&P/TSX 60 Index Standard Futures are trading at 1,347.50, down 1.00% from previous close

● Capital gains tax hike expected to raise $17.4 billion, but critics warn of economic fallout

● TC Energy eyes data centre growth as potential opportunity

● Open Text Corp. earns US$248.2 million in fourth quarter

Today, the Canadian dollar is trading at 72.10 cents US, a slight increase from previous close.

S&P/TSX 60 Index Standard Futures are trading at 1,347.50, down 1.00% from previous close.

The Parliamentary Budget Officer (PBO) is projecting a $17.4 billion boost in income tax revenues from 2024-’25 to 2028-’29, thanks to the federal government’s latest effort to bolster the nation’s coffers. The policy change, which was introduced in Budget 2024 and came into effect on June 25, increases the capital gains inclusion rate for corporations and trusts from one-half to two-thirds and applies the same rate for individuals on yearly gains exceeding $250,000.

The new policy adjusts the taxable portion of profits from the sale of capital assets. In a report released on Aug. 1, the PBO indicated the additional revenue would significantly improve the federal budgetary balance over the next five years.

Opponents of the tax policy are questioning the PBO’s estimates, however, and argue that the additional revenues come at too great a cost.

An analysis by the Montreal Economic Institute (MEI) challenges the government’s optimistic projections, estimating that the new capital gains taxes will bring in nearly $2 billion less than expected and be “at the expense of entrepreneurs and the middle class.”

Emmanuelle B. Faubert, an economist at the MEI, explains that the tax increase caused a “fire sale” of assets before the policy came into effect, resulting in an unusually high spike in revenue for the first year that will not be sustained in subsequent years.

“This tax increase will never again bring in as much revenue as it will its first year, as it reduces the incentive to invest in our startups,” Faubert said in a MEI press release.

“We’re seeing a shift in site preferences (for data centres) from regions where big telecom infrastructure is in place to regions where energy and supply infrastructure is in place,” Chapman said, adding a growing number of data centre operators are interested in building and owning their own on-site power generating capacity to address their high electricity needs.

Executive vice-president and chief operating officer Stan Chapman told analysts on a conference call that of the more than 300 data centres currently under construction or proposed in the U.S., more than 60 per cent are located within 80 km of TC Energy’s existing natural gas pipeline system.

“We’re seeing a shift in site preferences (for data centres) from regions where big telecom infrastructure is in place to regions where energy and supply infrastructure is in place,” Chapman said, adding a growing number of data centre operators are interested in building and owning their own on-site power generating capacity to address their high electricity needs.

There is great potential for these operators to tie into TC Energy’s natural gas pipeline system, not just in the U.S. but also in Mexico and Canada, he said.

“Our best-in-class footprint doesn’t limit the opportunity set just to the U.S.,” Chapman added.

“In Canada, there’s around 300 data centre operations today. We could see that (power demand) load increasing by one to two gigawatts before the end of the decade.”

The company’s full-year earnings were US$465.1 million, up from US$150.4 million in the previous financial year.

Diluted earnings per share were 91 cents US, up from a loss of 18 cents US a year earlier.

The company’s full-year earnings were US$465.1 million, up from US$150.4 million in the previous financial year.

CEO Mark Barrenechea says the company saw its revenues for the full year rise 29 per cent to US$5.8 billion.

The company says it completed a US$2 billion reduction in debt during the quarter. It also announced it’s increasing its annualized dividend by five per cent to US$1.05 per share.