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FRACTIONAL SHARES
The cash payment shareholders received for their fractional share gives rise to a deemed dividend. It is calculated as the difference between the cash received and the paid up capital of the corporation. For purposes of calculating the deemed dividend, a value of $30.54 per share was used to calculate the cash payment and the paid up capital is $28.69 per share. Thus, the deemed dividend will be the proportion representing the fractional interest multiplied by $1.89. In the case of shareholders resident in Canada such deemed dividend is subject to the rules generally applicable to the receipt of a dividend. In the case of shareholders not resident in Canada, the deemed dividend was subject to withholding tax at the time of the payment. Withholding tax was withheld and remitted to Revenue Canada at the time of the payment.
A U.S. shareholder that receives cash in lieu of a fractional share will be treated as having received such cash in redemption of such fractional share. This payment generally will be characterized as a short-term capital gain or loss equal to the difference between the cash received and the fair market value on July 2, 1998.
Fractional Shares - Canadian Tax Consequences
The cash payment shareholders received for their fractional share gives rise to a deemed dividend. It is calculated as the difference between the cash received and the paid up capital of the corporation. For purposes of calculating the deemed dividend, a value of $30.54 per share was used to calculate the cash payment and the paid up capital is $28.69 per share. Thus, the deemed dividend will be the proportion representing the fractional interest multiplied by $1.89. In the case of shareholders resident in Canada such deemed dividend is subject to the rules generally applicable to the receipt of a dividend. In the case of shareholders not resident in Canada, the deemed dividend was subject to withholding tax at the time of the payment. Withholding tax was withheld and remitted to Revenue Canada at the time of the payment.
Fractional Shares - U.S. Tax Consequences
A U.S. shareholder that receives cash in lieu of a fractional share will be treated as having received such cash in redemption of such fractional share. This payment generally will be characterized as a short-term capital gain or loss equal to the difference between the cash received and the fair market value on July 2, 1998.
