2014 T3 Tax Reporting Guide For Canadian Publicly Traded Income Trusts

RBC Investor Services Trust (RBC I&TS) has prepared the following guide to provide you with tax information regarding your enclosed 2014 tax slip. This information, along with the information that was sent to you earlier this year (Guide to your 2014 Tax Reporting), should assist you in preparing your 2014 return. Please note that all amounts are reported in Canadian currency (CAD).

If for tax purposes, you are Then you will receive A resident of living outside of . Canada Revenue Agency (CRA) T3 slip to be filed with your 2014 federal income tax return . An Information Summary of T3 Trust Income for your records A resident of Canada living in Quebec . In addition to your T3, you will receive a Revenu Quebec Relevé 16 (RL-16) to be filed with your 2014 Quebec income tax return . An Information Summary of T3/RL16 Trust Income for your records A non-resident of Canada A CRA NR4 slip

Consolidated reporting for T3 and RL16

The CRA allows consolidated reporting of fund income on a single T3 slip (and RL-16 where applicable). The Information Summary of T3 Trust Income shows the allocation of income for each fund for which you received distributions.

Special notes for non-residents receiving Trust Income on their NR4 slip

RBC I&TS’ policy is to report Trust income earned throughout the year as Gross Trust income and any amounts of tax withheld on that income. If the income trust pays distributions that are considered non-taxable you will need to complete an NR7-R form and file it with the CRA to obtain a refund of the tax paid on the non-taxable portion of the trust distributions.

Please also note that RBC I&TS is reporting Trust income paid to non-resident holders on a cash basis. This means that payments made to you in 2015 that are reportable by the Trust for 2014 are not included in your 2014 NR4 form.

Trust unit reporting deadlines

RBC I&TS relies on the income trusts to provide complete and timely information. Should the income trust amend their figures, RBC I&TS will produce amended slips as and when they are required. Clients who have additional questions regarding on information availability are encouraged to contact the income trusts directly.

1 | 2014 T3 TAX REPORTING GUIDE Canadian publicly traded unit trusts

General information

Tax reporting for investments in Canadian publicly traded income unit trusts is quite different from the reporting of and earned on interest-bearing instruments and equities. These entities are generally trusts, and as such, any income and capital gains taxable within the income trust are taxed at the top marginal personal tax rate. Most income trusts are structured to ensure that most income and capital gains are paid or payable to the unitholders, so that no tax is payable by the income trust itself.

. Final distributions of trust income and capital gains for a calendar year are generally made in January of the following year after final amounts have been calculated by the income trust managers. The investor is required to include these post year-end distributions in their taxable income for the year in which they were earned by the trust, rather than in the year they are distributed to the unitholder. . Non-resident holders: please refer to the note above regarding NR4 reporting of income trust income. . Although distributions are made to unitholders throughout the year, an income trust manager cannot generally determine with certainty the nature of the payments until after the end of the year when the reporting for the income trust is finalised. At that time, the income trust manager will release distribution percentages or payout factors for the year which indicate:

1. The final allocation of distributions between income, which is taxable for the year, and Return of Capital, which reduces the Adjusted Cost Base (ACB) of the investor’s units in the income trust.

2. The breakdown of income distributions by source (e.g., dividends, interest, foreign income, etc.). It is only when the income trust managers release the final factors for the year that we are able to complete tax reporting for these investments to our clients. We typically receive most of these factors during the first three weeks of March. The statutory deadline for reporting 2014 fund income to clients is March 31, 2015

RBC I&TS processing

To ensure consistent processing for our clients for 2014, RBC I&TS posted all of the distributions received during the year as income. If final factors for any income trusts indicate that any or all of the income distributions were a Return of Capital, an adjustment to the cost base of units is required with an offsetting adjustment to income.

If you held units of an income trust that require a cost base adjustment as a result of a Return of Capital, the amount of the adjustment is identified in box 42 of your information summary. We will process the adjustments as follows:

. If you hold any units in your account at the time the adjustment is processed, we will adjust the cost base of the units held at that time. . If you sold all your units during 2015 prior to the processing of the adjustment, we will reverse the sale, adjust the cost base and repost the sale using the correct cost base amount for purposes of calculating your gain or loss on sale. . If you sold all your units during 2014, you will have to adjust the ACB reported on the Capital Gains Worksheet that may have been included in the Tax Reporting Package sent to you in February. No adjusting entries will be processed by RBC I&TS. . If you closed your account and transferred your holdings to another custodian, you should advise your successor custodian that an ACB adjustment is required.

RBC Investor & Treasury Services™ is a global brand name and is part of Royal . RBC Investor & Treasury Services is a specialist provider of asset servicing, custody, payments and treasury services for financial and other institutional investors worldwide. RBC Investor & Treasury Services operates primarily through the following companies: , RBC Investor Services Trust and RBC Investor Services Bank S.A., and their branches and affiliates. The information contained within the document is for general information only and does not constitute investment, tax, legal or any other form of advice. RBC I&TS accepts no responsibility or liability of any kind for the accuracy, reliability or completeness of the information, or for any action taken, or results obtained, from the use of the information. ® / ™ Trademarks of Royal Bank of Canada. Used under licence.

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