Solid returns through dividends and growth

U.S. Tax Information

The following information is being provided to assist U.S. Investors in reporting distributions received on their IRS Form 1040 – U.S. Individual Income Tax Return. This summary is of a general nature only and is not intended to be, nor should it be construed to be legal, business or tax advice to any particular holder. U.S. Investors should consult their own tax advisors regarding the income tax considerations applicable to them in their particular circumstances.

Canexus Corporation

Effective July 8, 2011, Canexus Income Fund converted to Canexus Corporation. This conversion should qualify as a tax deferred transaction for U.S. tax purposes. As a result of such treatment, U.S. Holders should not generally recognize a gain or loss for U.S. federal income tax purposes. Any distributions received subsequent to July 15, 2011 will be treated as dividends to the extent that it is paid out of the Corporations current or accumulated earnings and profits (as determined under U.S. federal income tax principals). Dividends paid during 2011 to non-corporate U.S. Holders should be eligible for treatment as qualified dividend income, provided the holding period and other requirements are met by the U.S. Holder. U.S. Holders will be taxed on the U.S. dollar value of the Canadian dollars received, generally determined at the spot rate as of the date the payment is actually received.

The Corporation has not received an IRS letter ruling or a formal tax opinion from its tax advisors on these matters. U.S. Holders should consult their individual tax advisors regarding the proper tax reporting.

Total Dividend/Share Record Date Payment Date
$0.1368 Sep 30, 2011 Oct 17, 2011
$0.1368 Dec 31, 2011 Jan 16, 2012
$0.1368 Mar 31, 2012 Apr 16, 2012
$0.1368 Jun 30, 2012 Jul 16, 2012
$0.1368 Sep 30, 2012 Oct 15, 2012
$0.1368 Dec 31, 2012 Jan 15, 2013
$0.1368 Mar 31, 2013 Apr 15, 2013
$0.1368 Jun 30, 2013 Jul 15, 2013
$0.1368 Sep 30, 2013 Oct 15, 2013
$0.1368 Dec 31, 2013 Jan 15, 2014
$0.1368 Mar 31, 2014 Apr 15, 2014
$0.1000 Jun 30, 2014 Jul 15, 2014
$0.1000 Sep 30, 2014 Oct 15, 2014
$0.1000 Dec 31, 2014 Jan 15, 2015
$0.0100 Mar 31, 2015 Apr 15, 2015
$0.0100 Jun 30, 2015 Jul 15, 2015
$0.0100 Sep 30, 2015 Oct 15, 2015


Canexus Income Fund

In consultation with its U.S. tax advisors, the Fund believes that the units of the Fund more likely than not will be properly classified as equity in a corporation, rather than debt, for U.S. federal income tax purposes and that distributions paid to individual U.S. unitholders will more likely than not be "qualified dividends" for U.S. federal income tax purposes. As such, the portion of the distributions made that are considered dividends for U.S. federal income tax purposes should qualify for the reduced rate of tax applicable to long-term capital gains (where the holder meets certain criteria).

Provided the Fund distributions are considered to be qualified dividends as noted above, the Fund has determined that 100 percent of distributions paid up to July 15, 2011 will be taxable for U.S. tax purposes as "qualified dividends" with no return of capital.

The Fund has not received an IRS letter ruling or a formal tax opinion from its tax advisors on these matters. U.S. Holders should consult their individual tax advisors.

Total Distributions per Unit (CDN$)
  2011** 2010 2009 2008 2007 2006 2005
Total Distribution 0.273600 0.547200 0.547200 0.592800 0.847500 0.874800 0.325200

**Prior to conversion on July 8, 2011

Foreign Tax Credit Limitations

U.S. Holders may be subject to a minimum 15% Canadian withholding tax on payments distributed on shares/units held within a taxable U.S. account. Subject to certain conditions and limitations, such withholding taxes may be treated as foreign taxes eligible for credit against a U.S. Holder's U.S. federal income tax liability.