Tax Information

Tax Information

General Canadian Tax Summary
The following discussion is intended to provide a general explanation of the Canadian tax treatment of holding units of Partners Value Investments LP (the “Partnership”).

This summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any particular holder of Partnership units, and no representation with respect to the Canadian income tax consequences to any particular holder is made. Consequently, holders of Partnership units are advised to consult their own tax advisors with respect to their particular circumstances.

Characterization of Partners Value Investments LP for Tax Purposes
Partners Value Investments L.P. is an Ontario based limited partnership that is treated as a partnership for Canadian tax purposes. The Partnership is not a corporation or a trust. Partners Value Investments LP is a publicly traded partnership that does not earn active business income. Instead, the Partnership is generally expected to earn dividends from Canadian subsidiary corporations.

As a partnership, Partners Value Investments LP is a so-called "flow through" for Canadian tax purposes. That is, Partners Value Investments LP is not subject to tax, instead its income, (determined under Canadian tax rules using the Canadian dollar as its functional currency) is subject to tax in the hands of its unitholders.

Partners Value Investments LP is a qualified investment for RRSPs, deferred profit sharing plans, RRIFs, registered education savings plans, registered disability savings plans and TFSAs.

Nature of Preferred LP Distributions
The income allocated to the preferred LP unitholders is expected to consist of Canadian eligible dividends, the same tax treatment as receiving dividends on a preferred share of a Canadian corporation.

Communication of Tax Information
After the end of Partners Value Investments LP’s taxation year (December 31), the Canadian taxable income of the Partnership is determined and allocated to all unitholders that are in turn required to report such income in their respective tax returns. The allocation of Canadian taxable income is communicated using Form T5013 (not a Form T5). Canadian registered holders of Partners Value Investments LP units will receive a T5013 directly from the Partnership or the Partnership’s transfer agent. All other Canadian unitholders should receive a T5013 that is produced by their Canadian broker.

Computation of Tax Cost
For Canadian residents, in general, a unitholder's tax cost of his/her Partners Value Investment LP’s units should equal the sum of (i) the amount paid to acquire the units and (ii) the net taxable income allocated to the unitholder, minus (iii) the cash distributions received. If Partnership units were received as part of the capital reorganization in exchange for shares of Partners Value Investments Inc. (“PVI”), the original tax cost of the Partnership units for Canadian residents that filed a tax election under subsection 97(2) of the Income Tax Act (Canada) would be based on the amount that was elected.

For Canadian residents, the tax cost of units is determined in Canadian dollars so all three components noted above should be determined in Canadian dollars. Partners Value Investments LP does not have sufficient information to track the tax cost of units for each individual holder. Depending upon the particular taxation year, the T5013 will report various sources of income and expenses in a number of boxes on the form. The net taxable income allocated is the sum of the various income and expenses. Unitholders are obligated to accurately compute the tax cost of their Partnership units.

Capital Reorganization – July 2016
Partners Value Investments Inc. (the “Company”) (PVF: TSX-V) and Partners Value Investments LP (the “Partnership”) (PVF.UN and PVF.PR.A: TSX-V) completed a capital reorganization over the course of two-business days, commencing on June 30, 2016 and concluding on July 4, 2016. Upon completion of the plan of arrangement, all of the issued and outstanding common and non-voting shares of the Company (collectively, the “Shares”) will have been exchanged for one equity limited partnership unit of the Partnership (“Equity LP Units”) and 0.2719 Class A Preferred LP Units, Series 1 of the Partnership (“Series 1 Preferred LP Units”). Fractional share entitlements were settled in cash. In addition, each shareholder of the Company that did not validly exercise dissent rights has received one purchase warrant (“Warrants”) for each share held.

Pursuant to the Arrangement: (i) up to 73,546,897 Equity LP Units will be issued to shareholders of the Company at an issue price of $25.96 per Equity LP Unit; (ii) up to 19,997,402 Series 1 Preferred LP Units will be issued to shareholders of the Company at an issue price of US$25 per Series 1 Preferred LP Unit; and (iii) 73,544,024 Warrants were issued to shareholders of the Company. The exercise price of the Warrants is $32.45. Five warrants are required to purchase one non-voting exchangeable share of the Company. The non-voting exchangeable shares will be exchangeable for Equity LP Units of the Partnership at the option of the holder. The warrants will expire on June 30, 2026. The Equity LP Units, Series 1 Preferred LP Units and Warrants commenced trading on the TSX Venture Exchange under the symbols PVF.UN, PVF.PR.A and PVF.WT, respectively. The common shares of the Company ceased trading on the TSX Venture Exchange on June 29, 2016 after the market closed and have been de-listed from the TSX Venture Exchange.

For further details concerning the Canadian tax impact of the arrangement, please consult the management information circular mailed to shareholders of the Company on May 4, 2016.
Tax Elections: Eligible Canadian resident shareholders can exchange their PVI shares for the consideration on a full or partial tax-deferred rollover basis by filing a joint tax election in accordance with subsection 97(2) in the Income Tax Act (Canada) with the Canada Revenue Agency. To make the joint tax election, the Canadian Shareholder must provide the relevant information to the General Partner through a website, http://www.pwctaxelection.com, that will be made available for this purpose, including:
  1. the required information concerning the Canadian shareholder; 
  2. the details of the number of Shares exchanged in respect of which the Canadian shareholder is making a joint tax election; and 
  3. the applicable elected amounts for such PVI shares. 
The relevant information must be submitted to the General Partner through the website on or before September 23, 2016 (85 days following the effective date of June 30, 2016). For questions in respect of the tax election please call 1 (855) 348-5088 or e-mail pvi.tax.election@ca.pwc.com

Corporate Office

Brookfield Place
181 Bay Street
Suite 210
Toronto, ON M5J 2T3

Tel:(647) 503-6516
Fax:(416) 365-9642
Email: ir@pvii.ca

 

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