Canadian unitholders in DRI Healthcare Trust might be subject to Canadian income taxes, as cash distributions and unit distributions made in respect of a tax year should be treated as foreign income for tax purposes as income distributed from a trust retains its character in the hand of its beneficiaries. A special year-end cash and unit distribution is made to unitholders of record on December 31 of each year to ensure that 100% of the taxable income earned by DRI Healthcare Trust for that tax year is distributed to unitholders ensuring that DRI Healthcare Trust will not be subject to Part I tax. In order to assist with the completion of your Canadian income tax filings on an annual basis, unitholders may be mailed a T3 slip by the unitholders’ brokers or dealers by March 15th which will include information on the income distributed by DRI Healthcare Trust to unitholders for the relevant tax year. Please consult your tax advisor on how this will impact your tax filing position.
United States Unitholders:
DRI Healthcare Trust is considered a “passive foreign investment company” (“PFIC”) for U.S. federal income tax purposes as its income, consists primarily of passive royalty income and interest income, and its assets, consist primarily of assets that produce passive royalty income and interest income. As a PFIC, DRI Healthcare Trust will post a PFIC Annual Information Statement on its website annually on or before March 31st of the following year to provide U.S. unitholders with the information required to complete their U.S. tax filings for the previous taxation year including making the Qualified Electing Fund (“QEF”) election. Regardless of whether a QEF election is made with respect to DRI Healthcare Trust, generally, U.S. unitholders are required to file an annual report on Internal Revenue Service (“IRS”) Form 8621 containing such information with respect to their interest in a PFIC. Failure to file IRS Form 8621 for each applicable taxation year may result in substantial penalties and result in the U.S. unitholder’s taxable years being open to audit by the IRS until after such forms are properly filed. U.S. unitholders should consult with their tax advisors to determine whether a QEF election should be made. A unitholder who makes a QEF election generally is required to annually include in his or her taxable income a pro rata share of DRI Healthcare Trust’s ordinary earnings and net capital gains for years in which DRI Healthcare Trust is a PFIC, whether or not DRI Healthcare Trust makes any distributions to unitholders.