CALGARY, March 15 /CNW/ - Enterra Energy Trust ("Enterra" or the "Trust")
(TSX: ENT.UN, NYSE: ENT) is pleased to update its 2006 tax information for its
Canadian and U.S. unitholders.
2006 Canadian Tax Information
The following is intended to provide general guidance with respect to
2006 income tax reporting requirements for Canadian individual holders of
units of Enterra Energy Trust. The summary is of a general nature only and is
not intended to be legal or tax advice to any particular holder or potential
holder of the units of Enterra Energy Trust. Holders or potential holders of
the units should consult their own legal and tax advisors as to their
particular tax consequences of holding the units of Enterra Energy Trust.
The distributions declared to Canadian unitholders in 2006 were
determined to be 80.03% taxable and 19.97% deferred return of capital ("ROC").
Canadian unitholders holding the units of Enterra Energy Trust in a
registered retirement savings plan ("RRSP"), registered retirement income fund
("RRIF"), or deferred profit savings plan ("DPSP") should not report any
income related to distributions on their 2006 income tax return.
Unitholders holding their units outside such plans will receive a T3
supplementary information slip ("T3"), postmarked on or before March 31, 2007.
Canadian registered unitholders of Enterra should receive a T3 from Enterra's
transfer agent, Olympia Trust Company. Unitholders that hold their units
through a broker or other intermediary should receive a T3 directly from their
broker or intermediary and not from Enterra or its transfer agent.
Unitholders are to report the taxable portion of distributions received
as "other income" on their 2006 income tax return.
Canadian unitholders are required to reduce the adjusted cost base
("ACB") of their units by an amount equal to the tax-deferred portion of the
distributions. The ACB is used to calculate capital gains or losses on the
disposition of the units.
2006 United States Federal Income Tax Information
The following is intended to provide general guidance with respect to
2006 United States (U.S.) federal income tax reporting requirements for
certain U.S. holders of Enterra Energy Trust units. The summary is of a
general nature only and is not intended to be legal or tax advice to any
particular holder or potential holder of the units of Enterra Energy Trust.
Holders or potential holders should consult their own tax or legal advisors as
to their particular tax consequences of holding units of Enterra Energy Trust.
Although the Trust is a partnership for U.S. federal income tax purposes,
the source of the distributions made by the Trust during 2006 were the result
of distributions that it received on instruments from one or more other
Canadian corporations of which it owns all of the stock. Any such distribution
is a dividend for U.S. federal income tax purposes to the extent that it is
out of the current or accumulated earnings and profits of such corporations.
The Trust believes that its 2006 distributions meet the criteria for
qualified dividends which are subject to U.S. federal income tax in the hands
of a U.S. person at a maximum rate of 15 percent if such dividend meets the
holding period requirements of the U.S. Internal Revenue Code, that is,
(subject to certain tolling rules that apply if certain risk reduction
strategies are employed) (i) the unit is held for more than 60 days during the
121 day period which begins 60 days before the ex-dividend date of that
dividend, and (ii) the payer of the dividend is not a passive foreign
Trust units held outside a qualified retirement plan
The Canadian income taxes that are withheld (currently at a 15 percent
rate) from distributions to U.S. unitholders on trust units may be deducted
or, subject to limitations, used as a credit for U.S. federal income tax
purposes. Such limitations include the effect of the allocation of certain
interest expense to such foreign source income and the limitation that a U.S.
holder may claim any such Canadian withholding tax in respect of a
distribution by a corporation as a foreign tax credit only if such U.S. holder
held the corporation's stock for a period (subject to certain tolling rules
that apply if certain risk reduction strategies are employed) of at least 16
days during the 30 day period beginning on the date which is 15 days before
the date on which the stock went ex-dividend with respect to such dividend
without being under an obligation to make related payments with respect to
substantially similar or related property.
U.S. unitholders may deduct foreign income taxes in lieu of claiming them
as a credit in certain circumstances. Information regarding the amount of
Canadian tax withheld in 2006 should be determined from the unitholders' own
records or through their stockbrokers or other intermediaries. Any Canadian
withholding taxes that were paid cannot be used as a credit or a deduction for
U.S. federal income tax purposes if unitholders can recover such taxes from
Canada as an overpayment. Under current law, Canada permits the taxpayer to
recover certain Canadian withholding taxes when he/she incurs a "Canadian
property mutual fund loss" in the current year or in a prior year. Unitholders
should confer with a Canadian income tax advisor about how to make such a
recovery if they have such a loss.
If a portion of any such distribution that is made by the Trust that was
not out of the current or accumulated earnings and profits of its subsidiary
corporations, then such portion was not taxable as a dividend for U.S. federal
income tax purposes and the distribution of such amount would have reduced the
unitholders' basis because there will be no matching income inclusion. Hence,
U.S. unitholders who include as a dividend their portion of a distribution
that the Trust receives that is a non taxable return of capital could have a
lower basis in the trust units than the unitholders expect and may therefore
recognize for U.S. federal income tax purposes more gain than they expect upon
a sale of a trust unit. Such U.S. unitholders may be able to recover any
overpayment of U.S. federal income tax in the earlier year using the
provisions in the Internal Revenue Code as to mitigation of limitations.
U.S. unitholders, who hold their trust units of Enterra through a
stockbroker or other intermediary, may receive from such intermediaries one or
more Forms 1099-DIV or a substitute form developed internally for the
stockbroker or intermediary. Information on the Form 1099-DIV issued by the
broker or other intermediary may report distributions from Enterra as ordinary
dividends and not qualified dividends. Unless the U.S. unitholders determine
that the distributions were not qualified dividends after conferring with
their tax advisors, they may report such distributions as qualified dividends
if they make the appropriate disclosure as to such variance from the
information return that was received.
For 2006, to assist with the preparation of 2006 U.S. tax information,
Enterra's transfer agent, Olympia Trust Company, will issue Form 1099-DIVs to
all registered U.S. unitholders by the end of March 2007. The Form 1099-DIVs
will show that 100% of the distributions are taxable as qualifying dividends
eligible for the 15% rate. This reports the unitholders' share of the
qualified dividend income and related Canadian withholding tax. This form
should be used for information purposes only and should not be filed with the
tax return. Enterra may not issue such form for future years.
Enterra Energy Trust is a partnership for U.S. federal income tax
purposes. A partnership's income is typically reported on a Form K-1. Since
the source of the distributions made by the Trust during 2006 were
distributions that were received from corporations in which it is considered
to own all of the stock, such distributions generally should be regarded as
dividends for U.S. federal income tax purposes. If presented on a Form K-1,
the content would be similar to that in the Form 1099-DIV with the exception
of certain sources of income presented on a gross basis.
Trust units held within a qualified retirement plan
No amounts are required to be reported on an IRS Form 1040 - U.S.
Individual Income Tax Return if Enterra trust units are held within a
qualified retirement plan.
Enterra's distributions in 2007
All income of the Trust determined in accordance with the Income Tax Act
(Canada) (except taxable capital gains) paid or credited by the Trust to U.S.
unitholders will generally be subject to a reduced Canadian withholding tax at
a rate of 15% under the Canada-United States Tax Convention on 100% of the
distributions during 2007.
About Enterra Energy Trust
Enterra Energy Trust is a conventional oil and gas trust based in
Calgary, Alberta. The Trust acquires, operates and exploits petroleum and
natural gas assets principally in Alberta and British Columbia, Canada, and in
For further information:
For further information: E. Keith Conrad, President & CEO, Enterra
Energy Trust, Telephone: (403) 263-0262 or (877) 263-0262, E-mail:
email@example.com; Victor Roskey, Senior Vice President & CFO,
Enterra Energy Trust, Telephone: (403) 263-0262 or (877) 263-0262, E-mail: