CALGARY, Feb. 23 /PRNewswire-FirstCall/ -- Focus Energy Trust is pleased to provide 2006 tax information for its Canadian and U.S. resident unitholders.
2006 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 2006 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 2006 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 March 31, 2007.
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 2006 T1 Income Tax Return.
Taxable Income Allocated to Unitholders for 2006 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 earns.
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 2006 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, 2006.
Tax
Deferred
Taxable Amount
Income (Box 42
Distri- (Box 26 Return
bution Other of
Record Date Payment Date Paid Income) Capital)
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January 31, 2006 February 15, 2006 $0.19 $0.19 $0.00
February 28, 2006 March 15, 2006 $0.19 $0.19 $0.00
March 31, 2006 April 17, 2006 $0.19 $0.19 $0.00
April 30, 2006 May 15, 2006 $0.19 $0.19 $0.00
May 31, 2006 June 15, 2006 $0.19 $0.19 $0.00
June 30, 2006 July 17, 2006 $0.19 $0.19 $0.00
July 31, 2006 August 15, 2006 $0.16 $0.16 $0.00
August 31, 2006 September 15, 2006 $0.16 $0.16 $0.00
September 30, 2006 October 16, 2006 $0.16 $0.16 $0.00
October 31, 2006 November 15, 2006 $0.16 $0.16 $0.00
November 30, 2006 December 15, 2006 $0.16 $0.16 $0.00
December 31, 2006 January 15, 2007 $0.16 $0.16 $0.00
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Total $2.10 $2.10 $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 2006 is nil, there should be no effect on the adjusted cost base.
2006 U.S. TAX INFORMATION
The following information is being provided to assist U.S. individual unitholders of Focus Energy Trust in reporting distributions received from Focus during 2006 on their Internal Revenue Service ("IRS") Form 1040 - U.S. Individual Income Tax Return ("Form 1040") for 2006.
Focus has not obtained a legal or tax opinion, nor has it requested a ruling from the IRS on these matters.
Trust Units held outside of a Qualified Retirement Plan
For distributions relating to 2006, 100 percent of the distributions should be considered taxable as dividends to the unitholder for U.S. federal income tax purposes. After consulting with its tax advisors, Focus believes that its distributions should be considered "Qualified Dividends" under the Jobs and Growth Tax Relief Reconciliation Act of 2003 and should be eligible for the reduced U.S. dividend tax rate. However, the individual taxpayer's situation must be considered before making this determination. Qualified Dividends should be reported on Line 9(b) of the IRS Form 1040, unless the facts of the U.S. individual unitholder determine otherwise. Page 23 of the IRS 2006 Form 1040 instruction booklet provides examples of individual situations where the distributions would not be "Qualified Dividends". Where the distributions are not considered "Qualified Dividends" due to an individual's situation, the amount should be reported on Schedule B, Part II - Ordinary Dividends and Line 9(a) of your IRS Form 1040.
U.S. unitholders are encouraged to utilize the Qualified Dividends and Capital Gain Tax Worksheet provided by the IRS to determine the amount of tax applicable.
Canadian withholding taxes that have been withheld from the taxable portion of your distributions (as computed under Canadian tax principles) should be reported on Form 1116 "Foreign Tax Credit (Individual, Estate or Trust)". Amounts over-withheld should be claimed as a refund from the Canada Revenue Agency and should not be claimed as a credit against your U.S. federal income tax liability. Information regarding the amount of Canadian tax withheld relating to 2006 distributions should be available through your investment advisor or other intermediary and is not available from Focus.
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 Focus 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 Focus Energy Trust units. Holders or potential holders of trust units should consult their tax advisors as to their particular tax consequences of holding Focus 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.
