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If we are not a PFIC in the taxable year in which we pay a dividend or the immediately preceding taxable year,
dividends received by individual U.S. Holders will be taxed to such U.S. Holder at the rates applicable to long-term
capital gains as “qualified dividend income.” However, dividend income will not be qualified dividend income (and
will be taxed at ordinary income rates) if (i) the U.S. Holder has not held its common shares for at least 61 days
during the 121-day period beginning 60 days before the ex–dividend date; (ii) our common shares are not readily
tradable on an established securities market and we are not eligible for benefits of the U.S.-Canada income tax
treaty; or (iii) the company is a passive foreign investment company for the taxable year in which the dividend is
paid or in the preceding taxable year.
Dividends paid to a corporate U.S. Holder will be taxed as ordinary income and will not generally be eligible for the
dividends received deduction.
Surcharge on Net Investment Income; Other Tax Rules
A surtax of 3.8% (the “unearned income Medicare contribution tax”) is imposed on the “net investment income” of
certain U.S. citizens and resident aliens, and on the undistributed “net investment income” of certain estates and
trusts, in each case in excess of a certain threshold amount. Net investment income generally includes dividends and
net gain from the disposition of property (other than property held in a “non-passive” trade or business). Net
investment income is reduced by deductions that are properly allocable to such income. Special rules determine
when the unearned income Medicare contribution tax applies to distribution or income with respect to PFICs. U.S.
Holders should consult with their U.S. tax advisors concerning how these rules would apply to an investment in our
common shares.
Foreign Currency Transactions
Generally, amounts received by a U.S. Holder in foreign currency (including dividends paid in foreign currency)
will be valued at the rate of exchange on the date of receipt. The subsequent disposition of any foreign currency
received (including an exchange for U.S. currency) will generally give rise to ordinary gain or loss should the rate of
exchange subsequently change.
Foreign Tax Credit or Deduction
A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of
our common shares may be entitled, at the option of the U.S. Holder, to either receive a deduction or a tax credit for
U.S. federal income tax purposes with respect to such foreign tax paid or withheld. Significant and complex
limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the
proportionate share of the U.S. Holder’s U.S. income tax liability that the U.S. Holder’s “foreign source” income
bears to his or its worldwide taxable income. In applying this limitation, the various items of income and deduction
must be classified as either “foreign source” or “U.S. source.” Complex rules govern this classification process.
In lieu of a credit, a U.S. Holder who itemizes deductions may elect to deduct all of such holder's foreign taxes in
the taxable year. A deduction does not reduce U.S. tax on a dollar-for-dollar basis like a tax credit, but the deduction
for foreign taxes is not subject to the same limitations applicable to foreign tax credits. U.S. Holders are urged to
consult their own tax advisors regarding the availability of foreign tax credits.
A U.S. Holder’s ability to use foreign tax credits could be adversely affected if we are a PFIC.
Information Reporting and Backup Withholding
Certain U.S. Holders are required to report information relating to an interest in our common shares, subject
to certain exceptions, by attaching a completed IRS Form 8938, Statement of Specified Foreign Financial
Assets, with their tax return for each year in which they hold an interest in our common shares or warrants.
U.S. Holders are urged to consult their own tax advisors regarding information reporting requirements
relating to their ownership of our common shares.
Dividend payments made with respect to our common shares and proceeds from the sale or other disposition of our
common shares may be subject to information reporting requirements and to U.S. backup withholding (currently at a
rate of 28%).
