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Registered: 12/23/04
Posts: 67
Last seen: 11 years, 9 months
Canadian tax question
    #3537100 - 12/23/04 09:16 PM (11 years, 9 months ago)

Can anyone here explain the Canadian Income Tax Act in relation to foreign investors? Canadian royalty trusts invest in oil and gas and many pay about 10-11% dividend yield. Will foreign investors ever be taxed on royalty trusts and if so, what percentage do you think it would be?



Petrofund Energy Trust Addresses Proposed Income Tax Act Amendments
MARCH 24, 2004 - 18:22:21 ET
CALGARY, ALBERTA--(CCNMatthews - Mar 24, 2004) - In response to numerous
inquiries, Petrofund Energy Trust is providing clarity on the affect on
the Trust from the Canadian Government's amendments to the Income Tax
Act announced in the Federal Government's budget address yesterday.

Petrofund is not affected by the government's changes to the treatment
of withholding tax on distributions for non-residents. Petrofund's
treatment of non-resident distributions already complies with the
provisions announced in the budget in light of an ambiguity in certain
of Canada's tax treaties. As such, there are no changes contemplated or
required by the Trust. Consequently, this issue does not impact

Pension fund ownership restrictions announced in the Federal Budget are
also not expected to have an impact on Petrofund in that pension fund
restrictions indicated in the budget only apply to investments in
business income trusts, not oil and gas royalty trusts such as

Finally, the Federal government has also proposed changes in the Income
Tax Act that will eliminate Petrofund's current exemption from "not
being maintained primarily for the benefit of non-residents". With
the exemption removed, Petrofund will be required to attain majority
Canadian ownership by January 1, 2007, to maintain its status as a
Mutual Fund Trust. Petrofund's non-resident ownership level is estimated
at 66% as of February 27, 2004. Management of the Trust is currently
reviewing its options and will determine an appropriate course of action
to achieve compliance within the almost 3 year time frame. In the
meantime, there are no immediate effects expected from non-resident
ownership requirements on Petrofund.

Future legislative change is an ongoing risk associated with the Trust.
Petrofund will continue to monitor this situation on an ongoing basis
with the intent to maintain its status as a mutual fund trust.
Unitholders will be kept apprised of any changes. As well, Petrofund
will continue its active program to encourage and promote Canadian

Petrofund Energy Trust is a Calgary based royalty trust that acquires
and manages producing oil and gas properties in Western Canada. The
Trust makes monthly cash distributions to unitholders, which are derived
from the Trust's cash flow from these properties. Petrofund Energy Trust
was founded in 1988 and was one of the first oil and gas royalty trusts
in Canada. In accordance with its trust indenture, Petrofund was
established and is required to be maintained primarily for the benefit
of Canadian residents.

This news release may include statements about expected future events
and/or financial results that are forward-looking in nature and subject
to risks and uncertainties. For those statements, we claim the
protection of the safe harbor for forward-looking statements provisions
contained in the U.S. Private Securities Litigation Reform Act of 1995.
Petrofund Energy Trust cautions that actual performance will be affected
by a number of factors, many of which are beyond its control. Future
events and results may vary substantially from what Petrofund Energy
Trust currently foresees. Discussion of the various factors that may
affect future results is contained in Petrofund Energy Trust's recent
filings with the Securities and Exchange Commission and Canadian
securities regulatory authorities.


Jeffery E. Errico

President and Chief Executive Officer


Related stories:




Petrofund and Pengrowth


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