Progress Energy Trust provides 2006 tax information

    CALGARY, March 8 /CNW/ - (TSX-PGX.UN) - Progress Energy Trust ("Progress"
or the "Trust") is pleased to provide its 2006 tax information for Canadian
and U.S. resident unitholders.

    Tax Treatment of Distributions

    This information is intended to provide general guidance regarding
taxation matters to any particular holder or potential holder of Progress
Energy Trust ('Progress') units. It is not meant to be an exhaustive
discussion of all possible income tax considerations nor is it intended to be
legal or tax advice to any particular holder or potential holder of Progress
units. Holders or potential holders of trust units should consult their own
income tax advisors as to the particular income tax consequences of holding
the trust units.

    Canadian Individual Unitholders

    The Trust qualifies as a mutual fund trust under the Income Tax Act
(Canada) and, accordingly, trust units of the Trust are qualified investments
for RRSPs, RRIFs, RESPs and DPSPs.
    Each year, the Trust is required to file a Canadian income tax return and
any taxable income in the Trust is allocated to the unitholders. The
distributions paid by the Trust throughout the year can be, for tax purposes,
both a return of capital and a return on capital (ie: income). The allocation
between 'return of capital' and 'income' for tax purposes is contingent on the
tax deductions that the Trust can claim against the royalty and interest
income earned by the Trust. The main deduction is the COGPE (Canadian Oil &
Gas Property Expense) claim representing the cost of acquiring the royalty
from the operating company.
    Each year the taxable income portion is calculated, reported in the
Trust's T3 return and allocated to unitholders who are entitled to receive
distributions during the calendar year.
    Unitholders are generally required to include in income their pro-rata
share of any taxable income earned by the Trust in that year. Provided trust
units are held as capital property, an investor's adjusted cost base ('ACB')
of a trust unit generally equals the purchase price of the trust unit
(including commissions) less any non-taxable cash distributions received or
receivable from the date of acquisition. To the extent the ACB is reduced
below zero, such amount will be deemed to be a capital gain to the unitholder
in that year and the unitholder's ACB will be brought to $ nil. Capital gains
are reported on Schedule 3 of the T1 Personal Income Tax Return. Unitholders
should maintain a record of all distributions that are classified as partially
or entirely a tax-deferred distribution while holding Progress units.

    2006 Canadian Tax Information

    The following information is intended to assist individual unitholders of
Progress units resident in Canada in the preparation of their 2006 T1 Personal
Income Tax Return.

    Trust units held within a RRSP, RRIF, RESP or DPSP
    No amounts are required to be reported on the 2006 T1 Income Tax Return
where the Progress trust units are held within an RRSP, RRIF, RESP or DPSP.

    Trust units held outside of a RRSP, RRIF, RESP or DPSP

    Non-registered Unitholders:
    Unitholders who held their Progress trust units outside of an RRSP, RRIF,
RESP or DPSP, through a broker or other intermediary and were entitled to
receive cash distributions during 2006, will receive 'T3 Supplementary' slips
directly from their broker or intermediary, not from Progress nor our Trustee
and Transfer Agent, Computershare Trust Company of Canada ('Computershare').

    Registered Unitholders:
    Registered unitholders of Progress units who were entitled to receive
cash distributions during the period from Computershare (and not from a broker
or intermediary), will receive 'T3 Supplementary' slips directly from
    Progress has determined that distributions earned by Canadian resident
Unitholders in respect to the 2006 taxation year are 95% taxable and 5% a
tax-deferred return of capital. The table below summarizes, on a per unit
basis, the taxability of distributions included in the 2006 'T3 Supplementary'

    2006 Cash Distributions Information for Canadian Unitholders
    ($/trust unit)

    Record Date   Payable Date  Distribution  Taxable Amt    Tax Deferred Amt
                                             (Other Income) (Red. to ACB)
    January 31    February 15   $0.14         $0.133         $0.007
    February 28   March 15      $0.14         $0.133         $0.007
    March 31      April 17      $0.14         $0.133         $0.007
    April 30      May 15        $0.14         $0.133         $0.007
    May 31        June 15       $0.14         $0.133         $0.007
    June 30       July 17       $0.14         $0.133         $0.007
    July 31       August 15     $0.14         $0.133         $0.007
    August 31     September 15  $0.14         $0.133         $0.007
    September 30  October 16    $0.14         $0.133         $0.007
    October 31    November 15   $0.14         $0.133         $0.007
    November 30   December 15   $0.14         $0.133         $0.007
    December 31   January 15,   $0.14         $0.133         $0.007

    As required by the Income Tax Act, taxable amounts allocated by Progress
in 2006 to the unitholders must be reported by the unitholders in their 2006
Income Tax Return. Accordingly, the taxable amount of cash distributions
(i.e. 'Other Income' Box (26) on the T3 slips) with respect to record dates
from January 31, 2006 up to and including December 31, 2006 are included in
your 'T3 Supplementary.' The deadline for mailing all T3 Supplementary
Information slips as required by Canada Revenue Agency ('CRA') is March 31,


    The following information is being provided to assist U.S. individual
unitholders of Progress Energy Trust ("Progress") in reporting distributions
received from Progress during 2006 on their Internal Revenue Service ("IRS")
Form 1040, "U.S. Individual Income Tax Return" ("Form 1040").
    The information contained herein is not meant to be an exhaustive
discussion of all possible U.S. income tax considerations and is not intended
to be legal or tax advice to any particular holder or potential holder of
Progress trust units. Holders or potential holders of Progress trust units
should consult their own legal or tax advisors as to their particular tax
consequences of holding Progress trust units. Progress has not sought a legal
or tax opinion, nor has Progress requested a ruling by the U.S. Internal
Revenue Service, regarding these matters.

    Trust Units Held Within a Qualified Retirement Plan

    No amounts are required to be reported on an IRS Form 1040 where Progress
trust units are held within a qualified retirement plan.

    Qualified Dividends

    In consultation with its U.S. tax advisors, Progress believes that its
trust units should be properly classified as equity in a corporation, rather
than debt, and that dividends paid to individual U.S. unitholders should be
"qualified dividends" for U.S. federal income tax purposes. As such, the
portion of the distributions made during 2006 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.
    Progress has not received an IRS letter ruling or a tax opinion from its
tax advisors on these matters.

    Trust Units Held Outside a Qualified Retirement Plan

    With respect to cash distributions paid during the year to U.S.
individual unitholders, 7.71 percent should be reported as a return of capital
(to the extent of the unitholder's U.S. tax basis in their respective units)
and 92.29 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.
individual unitholders determines otherwise. Commentary on page 23 of the Form
1040 Instruction Booklet for 2006 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.
    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.
    The taxable portion (for Canadian income tax purposes) of the
distributions is subject to a minimum 15% Canadian withholding tax that is
withheld prior to any payments being distributed to unitholders. Beginning in
2005, the return of capital portion (for Canadian income tax purposes) of the
distributions is also subject to a 15% 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 2006 should be determined from your own
records and is not available from Progress. 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.
    Investors should report their dividend income and capital gain (if any),
and make adjustments to their tax basis in Progress's units, in accordance
with this information and subject to advice from their tax advisors. U.S.
individual unitholders who hold their Progress 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. Progress is not required to furnish such 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.

    2006 Cash Distribution Information

    The following table provides, on a per unit basis, the breakdown of the
amount of cash dividends, prior to Canadian withholding tax, paid by Progress
during 2006. The amounts are segregated between the portion of the cash
distributions that would be reported on U.S. Form 1099-DIV as 'Qualified
Dividends' and the portion reported as 'Non-Dividend Distributions'. The
amounts shown on the attached schedule are converted to U.S. dollars on the
applicable payment dates. This schedule is for information purposes only.

    Progress Energy Trust
    2006 Cash Distribution Information
    For U.S. Unitholders

                       Distri-             Distri-    Taxable     Non-
    Record    Payable  bution    Exchange  bution     Qualified   Dividend
    Date      Date     Paid CDN$ Rate      Paid US$   Dividends  Distribution
                                                      US$         US$
    Dec. 31,
     2005     Jan. 16   $0.14    $0.8637   $0.120918  $0.111595   $0.009323
    Jan. 31   Feb. 15   $0.14    $0.8665   $0.121310  $0.111957   $0.009353
    Feb. 28   Mar. 15   $0.14    $0.8656   $0.121184  $0.111841   $0.009343
    Mar. 31   Apr. 17   $0.14    $0.8731   $0.122234  $0.112810   $0.009424
    Apr. 30   May 15    $0.14    $0.8977   $0.125678  $0.115988   $0.009690
    May 31    June 15   $0.14    $0.8947   $0.125258  $0.115601   $0.009657
    June 30   July 17   $0.14    $0.8832   $0.123648  $0.114115   $0.009533
    July 31   Aug. 15   $0.14    $0.8912   $0.124768  $0.115148   $0.009620
    Aug. 31   Sept. 15  $0.14    $0.8933   $0.125062  $0.115420   $0.009642
    Sept. 30  Oct. 16   $0.14    $0.8783   $0.122962  $0.113482   $0.009480
    Oct. 31   Nov. 15   $0.14    $0.8760   $0.122640  $0.113184   $0.009456
    Nov. 30   Dec. 15   $0.14    $0.8640   $0.120960  $0.111634   $0.009326
    Total per
     Unit               $1.68              $1.4766    $1.3628     $0.1138

    Forward-Looking Statements - Certain information regarding Progress set
forth in this document, including management's assessment of Progress's future
plans and operations, contains forward-looking statements that involve
substantial known and unknown risks and uncertainties. These forward-looking
statements are subject to numerous risks and uncertainties, certain of which
are beyond Progress's control, including the impact of general economic
conditions, industry conditions, volatility of commodity prices, currency
fluctuations, imprecision of reserve estimates, environmental risks,
competition from other producers, the lack of availability of qualified
personnel or management, stock market volatility and ability to access
sufficient capital from internal and external sources. Progress's actual
results, performance or achievement could differ materially from those
expressed in, or implied by, these forward-looking statements and,
accordingly, no assurance can be given that any of the events anticipated by
the forward-looking statements will transpire or occur, or if any of them do
so, what benefits that Progress will derive therefrom.

    %SEDAR: 00020979E

For further information:

For further information: Mr. Greg Kist, Vice President, Investor
Relations, Phone: (403) 539-1809, Toll Free: 1-866-216-2510, Fax: (403)
216-2514, Email:, Web:

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