Tax Status of Cash Distributions –
Calculation of Cost Base of Units

The Fund’s units and debentures are qualified investments for registered retirement savings plans (RRSPs), registered education savings plans (RESPs), deferred profit-sharing plans (DPSPs) and registered retirement income funds (RRIFs) under the Canadian Income Tax Act. Fund Unitholders who hold units outside these plans will generally be required to include in their income, for a particular taxation year, the portion of the distributions received that are taxable as other income (included on T3 or T5 income tax slips).

The tax deferral of a portion of distributions arises as the Fund’s capital cost allowance and expenses significantly reduce the Fund’s income that would otherwise be taxable. The tax-deferred portion of distributions represents a return of capital for Canadian income tax purposes and reduces the adjusted cost base of the trust units. Generally a trust unit is considered to be capital property. The actual or deemed disposition of a unit will give rise to a gain (or loss) equal to the amount by which the proceeds of disposition of a trust unit are greater (or less) than the adjusted cost base of the unit and any associated selling expenses.