CALGARY, Feb. 8 /CNW/ - Focus Energy Trust is pleased to provide 2007 tax
information for its Canadian and U.S. resident unitholders.
2007 CANADIAN TAX INFORMATION
The following information is intended to assist Canadian holders of trust
units of Focus Energy Trust (FET.UN - TSX) in the preparation of their 2007 T1
Income Tax Return. This summary is directed to a unitholder who, for purposes
of the Income Tax Act (Canada), is a resident of Canada and holds the units as
capital property. Other unitholders are advised to consult with their tax
advisor concerning their circumstances.
Trust Units held within an RRSP, RRIF or DPSP
NO AMOUNTS are to be reported on the 2007 income tax return where trust
units are held within a Registered Retirement Savings Plan (RRSP), Registered
Retirement Income Fund (RRIF), Deferred Profit Savings Plan (DPSP), or any
other such registered plans.
Trust Units held outside of an RRSP, RRIF or DPSP
If the trust unit is held through a broker or other intermediary then the
unitholder will receive a T3 Supplementary slip directly from the broker or
intermediary, not from the transfer agent (Valiant Trust Company) or from
Focus, no later than February 29, 2008.
If the unitholder is a registered holder then the unitholder will receive
a T3 Supplementary slip directly from Valiant Trust Company.
The amount reported in Box (26) on the T3 Supplementary slip, "Other
Income", should be reported on the 2007 T1 Income Tax Return.
Taxable Income Allocated to Unitholders for 2007 and Taxation Treatment
Focus Energy Trust, for purposes of the Canadian Income Tax Act, is
treated as a mutual fund trust and each year the Trust files an income tax
return with the taxable income allocated to the unitholders. Distributions
paid to the unitholders may be both a return on capital (income) and a return
of capital. The allocation between these two streams is dependent upon the
income tax deductions that the Trust is able to claim against the income it
For those unitholders who held their Focus Energy Trust units outside of
a registered plan, the income portion is reported in Box (26) of the T3
Supplementary slip, "Other Income", and should be reported on the 2007 T1
Income Tax Return.
The following table outlines the breakdown of cash distributions per unit
paid by Focus Energy Trust with respect to record dates for the period
January 31 to December 31, 2007.
Income (Box 42
Distri- (Box 26 Return
bution Other of
Record Date Payment Date Paid Income) Capital)
January 31, 2007 February 15, 2007 $0.14 $0.14 $0.00
February 28, 2007 March 15, 2007 $0.14 $0.14 $0.00
March 31, 2007 April 16, 2007 $0.14 $0.14 $0.00
April 30, 2007 May 15, 2007 $0.14 $0.14 $0.00
May 31, 2007 June 15, 2007 $0.14 $0.14 $0.00
June 30, 2007 July 16, 2007 $0.14 $0.14 $0.00
July 31, 2007 August 15, 2007 $0.14 $0.14 $0.00
August 31, 2007 September 17, 2007 $0.14 $0.14 $0.00
September 29, 2007 October 15, 2007 $0.14 $0.14 $0.00
October 31, 2007 November 15, 2007 $0.14 $0.14 $0.00
November 30, 2007 December 17, 2007 $0.14 $0.14 $0.00
December 31, 2007 January 15, 2008 $0.14 $0.14 $0.00
Total $1.68 $1.68 $0.00
Adjusted Cost Base
In most circumstances, the return of capital portion will reduce the
unitholder's adjusted cost base of their Focus Energy Trust units. Since the
return of capital for 2007 is nil, there should be no effect on the adjusted
2007 U.S. TAX INFORMATION
The following information is being provided to assist U.S. individual
unitholders ("U.S. Unitholders") of Focus Energy Trust ("Focus") in reporting
distributions received from Focus during 2007 on their Internal Revenue
Service ("IRS") Form 1040 - U.S. Individual Income Tax Return ("Form 1040")
Focus has not obtained a legal or tax opinion, nor has it requested a
ruling from the IRS on these matters.
In consultation with its U.S. tax advisors, Focus believes that its trust
units ("Trust Units") should be properly classified as equity in a
corporation, rather than debt, and that dividends paid to U.S. Unitholders
should be "qualified dividends" for U.S. federal income tax purposes. As such,
the portion of the distributions made during 2007 that are considered
dividends for U.S. federal income tax purposes should qualify for the reduced
rate of tax applicable to long-term capital gains. However, the individual
taxpayer's situation must be considered before making this determination.
Trust Units Held Outside of a Qualified Retirement Plan
With respect to cash distributions paid during the year to U.S.
Unitholders, 100 percent should be reported as "qualified dividends".
The portion of the distributions treated as "qualified dividends" should
be reported on Line 9b of Form 1040, unless the fact situation of the U.S.
Unitholder determines otherwise. Commentary on page 19 of the Form 1040
Instruction Booklet for 2007 with respect to "qualified dividends" provides
examples of individual situations where the dividends would not be "qualified
dividends". Where, due to individual situations, the dividends are not
"qualified dividends", the amount should be reported on Schedule B - Part II -
Ordinary Dividends and Line 9a of Form 1040.
For U.S. federal income tax purposes, in reporting a return of capital
with respect to distributions received, U.S. Unitholders are required to
reduce the cost base of their Trust Units by the total amount of distributions
received that represent a return of capital. This amount is non-taxable if it
is a return of cost base in the Trust Units. A return of capital for U.S. tax
purposes is calculated differently than for Canadian tax purposes. For U.S.
tax purposes, a return of capital occurs only after all the current and
accumulated earnings and profits of a corporation have been distributed. If
the full amount of the cost base has been recovered, any further return of
capital distributions should be reported as capital gains. Since the return of
capital for 2007 is nil, there should be no effect on cost base to U.S.
U.S. Unitholders are encouraged to utilize the Qualified Dividends and
Capital Gain Tax Worksheet of Form 1040 to determine the amount of tax that
may be otherwise applicable.
For Canadian income tax purposes, the distributions are subject to a
minimum 15% Canadian withholding tax that is withheld prior to any payments
being distributed to Unitholders. Where Trust Units are held in a cash
account, we believe the full amount of all withholding tax should be
creditable, subject to numerous limitations, for U.S. tax purposes in the year
in which the withholding taxes are withheld. Where Trust Units are held in a
qualified retirement account, the same withholding taxes apply but the amount
is not creditable for U.S. tax purposes.
The amount of Canadian tax withheld should be reported on Form 1116,
"Foreign Tax Credit (Individual, Estate, or Trust)". Information regarding the
amount of Canadian tax withheld in 2007 should be determined from your own
records and is not available from Focus. Amounts over withheld, if any, from
Canada should be claimed as a refund from the Canada Revenue Agency no later
than two years after the calendar year in which the payment was paid.
U.S. Unitholders should report their dividend income and capital gain (if
any), and make adjustments to their tax basis in the Trust Units, in
accordance with this information and subject to advice from their tax
advisors. U.S. Unitholders who hold their Trust Units through a stockbroker or
other intermediary should receive tax reporting information from their
stockbroker or other intermediary. We expect that the stockbroker or other
intermediary will issue a Form 1099-DIV, "Dividends and Distributions" or a
substitute form developed by the stockbroker or other intermediary. Focus is
not required to furnish such U.S. Unitholders with Form 1099-DIV. Information
on the Forms 1099-DIV issued by the brokers or other intermediaries may not
accurately reflect the information in this press release for a variety of
reasons. Investors should consult their brokers and tax advisors to ensure
that the information presented here is accurately reflected on their tax
returns. Brokers and/or intermediaries may or may not be required to issue
amended Forms 1099-DIV.
Trust Units Held Within a Qualified Retirement Plan
There should be no amount that is required to be reported as income on an
IRS Form 1040 where the Trust Units are held in a Qualified Retirement Plan.
The information in this release is not meant to be an exhaustive
discussion of all possible income tax considerations, but a general guideline
and is not intended to be legal or tax advice to any particular holder or
potential holder of Trust Units. Holders or potential holders of Trust Units
should consult their tax advisors as to their particular tax consequences of
holding Trust Units.
Focus Energy Trust is a natural gas weighted energy trust. Focus is
committed to maintaining its emphasis on operating high quality oil and gas
properties, delivering consistent distributions to unitholders and ensuring
financial strength and sustainability.
Focus Energy Trust units trade on the TSX under the symbol FET.UN.
For further information:
For further information: Bill Ostlund, Senior Vice President & Chief
Financial Officer, Focus Energy Trust, Suite 3300, 205 - 5 Avenue S.W.,
Calgary, Alberta, T2P 2V7, Phone: (403) 781-8409, Fax: (403) 781-8408