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Baytex Energy Corp.

United States Shareholders

  

Canadian Shareholders

United States Unitholders

  

2012

The information contained herein is intended to provide general guidance to assist individuals who are citizens or residents of the United States ("U.S. Shareholders") with income tax reporting for dividends paid by Baytex. This summary is of a general nature only and is not intended to constitute legal or tax advice to any shareholder or potential shareholder of Baytex.

IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS you are hereby notified that: (a) any discussion of United States federal tax issues in this webpage is not intended or written by Baytex Energy Corp. to be relied upon and cannot be relied upon by you for the purpose of avoiding penalties that may be imposed on you under the Internal Revenue Code; (b) such discussion is written in connection with the promotion or marketing of the transactions or matters addressed herein; and (c) you should seek advice based on your particular circumstances from an independent tax advisor.

Baytex is of the view that it's dividends meet the criteria for "Qualified Dividends". There are certain individual circumstances where the dividends may not be Qualified Dividends, such as circumstances where the shareholder does not meet a holding period test. Where these circumstances apply, the dividends are to be reported as "Ordinary Dividends."

Information relating to dividends paid by Baytex is provided annually on Form 1099-DIV. Registered U.S. resident shareholders will receive this form from our transfer agent, Valiant Trust Company, who can be reached directly at 1-866-313-1873. Non-registered U.S. resident shareholders will receive their Form 1099-DIV from their broker and not from Baytex or our transfer agent. We strongly recommend you obtain advice from your tax advisor about the tax treatment of the dividends you receive.

2011

The information contained herein is intended to provide general guidance to assist individuals who are citizens or residents of the Unites States (" U.S. Shareholders") with income tax reporting for dividends paid by Baytex during 2011. This summary is of a general nature only and is not intended to constitute legal or tax advice to any shareholder or potential shareholder of Baytex. Anything contained in this notice concerning any United States ("U.S.") federal tax issue is not intended or written to be used, and it cannot be used, for the purpose of avoiding U.S. federal tax penalties under the U.S. Internal Revenue Code. Investors should consult their own tax advisors as to their particular tax consequences of holding shares in Baytex.

Corporate Conversion

Pursuant to a plan of arrangement effective December 31, 2010, Baytex Energy Trust (the "Trust") converted from a mutual fund trust into a publicly listed corporation. Prior to conversion, the Trust was treated as a corporation and its units as equity under U.S. tax law and accordingly, former U.S. resident unitholders of the Trust who are now U.S. Shareholders of Baytex should not see any change with respect to how dividends are reported post-conversion.

Qualified dividends

Baytex is of the view that 100% of the 2011 dividends meet the criteria for "Qualified Dividends" which are subject to U.S. federal income tax at a maximum rate of 15% in the hands of a U.S. Shareholder who is an individual. There are certain individual circumstances where the dividends may not be Qualified Dividends, such as circumstances where the shareholder does not meet a holding period test. Where these circumstances apply, the dividends are to be reported as "Ordinary Dividends."

Shares held outside of a qualified retirement plan

Under Canadian tax legislation, monthly dividends paid by Baytex to non-residents of Canada are subject to a withholding tax. Baytex believes that tax withheld from dividends to U.S. Shareholders on shares held outside of a qualified retirement account may, subject to generally applicable limitations be used as a foreign tax credit for U.S. federal income tax purposes in the year in which the withholding taxes were withheld. No portion of the withholding tax is creditable to those shareholders who held their shares in a qualified retirement account (such as an IRA).

Generally, a distribution is treated as a dividend for U.S. federal income tax purposes to the extent such distribution is paid out of the current or accumulated earnings and profits of a corporation, as determined under U.S. federal income tax principles. A distribution in excess of a corporation's current and accumulated earnings and profits will first be treated as a return of capital to the extent of a U.S. Shareholder's adjusted tax basis, in the shares and will be applied against and reduce such basis on a dollar-for-dollar basis. To the extent that such distribution exceeds the U.S. Shareholder's adjusted tax basis, the distribution will be treated as a capital gain.

Dividend Reporting

All distributions made by Baytex during 2011 were dividends of income and, consequently, no portion of the distributions paid during 2011 should be reported as a tax-deferred return of capital.

U.S. Shareholders who held their shares through a broker or other intermediary may receive from the broker or such intermediaries one or more Form 1099-DIV "Dividends and Distributions" or a substitute form developed by the broker or other intermediary. Baytex's transfer agent, Valiant Trust Company, will issue Forms 1099-DIV to all registered U.S. Shareholders of Baytex. The forms will report that 100% of the dividends are taxable as qualifying dividends eligible for the 15% rate. This form should be used for information purposes only and should not be filed with the tax return.

Shares held within a qualified retirement plan

No amounts are required to be reported on a Form 1040 – U.S. Individual Income Tax Return where Baytex shares were held within a qualified retirement plan. Where the shares were held in a qualified retirement plan, Canadian withholding taxes apply. While the amount of the Canadian withholding tax is not creditable for U.S. tax purposes, it is possible to apply to the Canada Revenue Agency ("CRA") for a refund. For more information on applying for a refund of Canadian withholding tax, see the FAQs on our website under the "About Baytex" section.

Non-Resident Withholding Tax Policy Change

Baytex wishes to advise all shareholders that the CRA has introduced new rules which may require residents of countries with which Canada has a tax treaty to certify that they are eligible for treaty benefits in that country in order to continue to have non-resident tax withheld at the tax rate specified by the applicable tax treaty (the "Tax Treaty Rate"). Income tax treaties between Canada and foreign countries generally provide for a lower rate of withholding tax to be deducted from various kinds of income payments to non-residents of Canada , including dividends.

On December 2, 2011, registered, non-resident shareholders whose names appeared on the records of the registrar and transfer agent of Baytex were mailed a form by Baytex's transfer agent requesting information to confirm tax treaty eligibility. Until such form is completed and returned to Baytex's transfer agent, any applicable Tax Treaty Rate will not be applied when determining the amount of the withholding tax.

Non-registered, non-resident shareholders' eligibility for any applicable Tax Treaty Rate will be determined by each shareholder's broker and not by Baytex or its transfer agent. Non-registered shares are generally held in a brokerage account and are thus registered in the name of the shareholder's broker or a depositary. Certain brokers may require additional information or certifications in order to determine a non-resident shareholder's eligibility for any applicable Tax Treaty Rate. Non-resident, non-registered shareholders are encouraged to contact their brokers or other tax, legal or financial advisors in the event that they have any questions or concerns in this regard.

IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS you are hereby notified that: (a) any discussion of United States federal tax issues in this document is not intended or written by the Trust or Baytex to be relied upon and cannot be relied upon by you for the purpose of avoiding penalties that may be imposed on you under the Internal Revenue Code; (b) such discussion is written in connection with the promotion or marketing of the transactions or matters addressed herein; and (c) you should seek advice based on your particular circumstances from an independent tax advisor.

2010

The information contained herein is intended to provide general guidance to assist in income tax reporting for distributions declared to U.S. individual unitholders of the Trust in 2010. The summary is of a general nature only and is not intended to constitute legal or tax advice to any unitholder of the Trust or potential shareholder of Baytex. Investors should consult their own tax advisors as to their particular tax consequences. Neither Baytex nor the Trust has received a letter ruling from the Internal Revenue Service or an opinion from its tax advisors on these matters.

Qualified dividends
The Trust is treated as a foreign corporation for U.S. federal income tax purposes, and it has determined that all of its 2010 distributions should be treated as dividends for U.S. federal income tax purposes. The Trust is of the view that 100% of the 2010 distributions meet the criteria for “qualified dividends” which are subject to U.S. federal income tax at a maximum rate of 15% in the hands of a U.S. individual unitholder.

Trust units held outside of a qualified retirement plan
Under Canadian tax legislation, monthly distributions paid by the Trust to non-residents of Canada are subject to a 15% withholding tax, regardless of the character of the distribution as return on capital or return of capital. The Trust believes the Canadian income taxes that were withheld from distributions to U.S. unitholders on trust units held outside of a qualified retirement account, may be deducted or, subject to generally applicable limitations, used as a foreign tax credit for U.S. federal income tax purposes in the year in which the withholding taxes were withheld. No portion of the withholding tax is creditable to those unitholders who held their trust units in a qualified retirement account (such as an IRA).

Generally, a distribution is treated as a dividend for U.S. federal income tax purposes to the extent such distribution is paid out of the current or accumulated earnings and profits of the Trust as determined under U.S. federal income tax principles (including using U.S. tax rules which allow for various deductions including accounting based depletion). A distribution in excess of the Trust's current and accumulated earnings and profits will first be treated as a tax-free return of capital to the extent of a U.S. unitholder's adjusted tax basis in its trust units and will be applied against and reduce such basis on a dollar-for-dollar basis. To the extent that such distribution exceeds the U.S. unitholder's adjusted tax basis, the distribution will be treated as a capital gain. Unitholders who are not residents of Canada for income tax purposes are encouraged to seek advice from a qualified tax advisor in the country of residence for the tax treatment of distributions.
v U.S. unitholders who held their trust units through a broker or other intermediary may receive from the broker or such intermediaries one or more Form 1099-DIV “Dividends and Distributions” or a substitute form developed by the broker or other intermediary. Information on the Form 1099-DIV issued by the broker or other intermediary may not accurately reflect the information in this press release for a variety of reasons. Unitholders should consult their brokers and tax advisors to ensure that the information presented in this press release is accurately reflected on their tax returns. Brokers may or may not be required to issue an amended Form 1099-DIV.

For 2010, to assist with the preparation of 2010 U.S. tax information, Baytex’s transfer agent, Valiant Trust Company, will issue Forms 1099-DIV to all registered U.S. unitholders of the Trust by mid March, 2011. The Forms 1099-DIV will report that 100% of the distributions are taxable as qualifying dividends eligible for the 15% rate. This reports the unitholders’ share of the qualified dividend income and related Canadian withholding tax. This form should be used for information purposes only and should not be filed with the tax return.

Trust units held within a qualified retirement plan
No amounts are required to be reported on a Form 1040 – U.S. Individual Income Tax Return where the trust units were held within a qualified retirement plan. Where the trust units were held in a qualified retirement plan, the Canadian withholding taxes (currently at a rate of 15%) apply. While the amount of the Canadian withholding tax is not creditable for U.S. tax purposes, it is possible to apply to the Canada Revenue Agency for a refund. For more information on applying for a refund of Canadian withholding tax, see the FAQs on our website under the "About Baytex" section.

IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS you are hereby notified that: (a) any discussion of United States federal tax issues in this document is not intended or written by the Trust or Baytex to be relied upon and cannot be relied upon by you for the purpose of avoiding penalties that may be imposed on you under the Internal Revenue Code; (b) such discussion is written in connection with the promotion or marketing of the transactions or matters addressed herein; and (c) you should seek advice based on your particular circumstances from an independent tax advisor.

2009

This information is not exhaustive of all possible U.S. income tax considerations, but is a general guideline and is not intended to be legal or tax advice to any particular holder or potential holder of Baytex trust units. Holders or potential holders of Baytex trust units should consult their own legal and tax advisors as to their particular tax consequences of holding Baytex trust units as well as to determine whether claiming a credit or deduction for foreign income taxes is more beneficial for them. Baytex has not received a letter ruling from the Internal Revenue Service or an opinion from its tax advisors on these matters.

The Trust is treated as a foreign corporation for U.S. federal income tax purposes, and it has determined that all of its 2009 distributions should be treated as dividends for U.S. federal income tax purposes. The Trust is of the view that the 2009 distributions treated as dividends should qualify as "qualified dividend income" subject to a maximum income tax rate of 15% to non-corporate U.S. unitholders.

Generally, a distribution made to a U.S. unitholder will be treated as dividend income to the extent such distribution is paid out of the current or accumulated earnings and profits of the Trust as determined under U.S. federal income tax principles (including using U.S. tax rules which allow for various deductions including accounting based depletion). A distribution in excess of the Trust's current and accumulated earnings and profits will first be treated as a tax-free return of capital to the extent of a United States unitholder's adjusted tax basis in its trust units and will be applied against and reduce such basis on a dollar-for-dollar basis. To the extent that such distribution exceeds the U.S. unitholder's adjusted tax basis, the distribution will be treated as capital gain.

U.S. unitholders should receive a Form 1099 or facsimile detailing the total distribution received, the amount withheld, and the amount taxable as dividends. Some unitholders may receive a Form 1099 from their brokers. Information on the Form 1099 issued by the brokers may not accurately reflect the information in this press release for a variety of reasons. Unitholders should consult their brokers and tax advisors to ensure that the information presented here is accurately reflected on their tax returns. Brokers may or may not be required to issue an amended Form 1099.

Unitholders who are not residents of Canada for income tax purposes are encouraged to seek advice from a qualified tax advisor in the country of residence for the tax treatment of distributions. Under Canadian tax legislation, monthly distributions paid by Baytex to non-residents of Canada are subject to a flat 15% withholding tax, regardless of the character of the distribution as return on capital or return of capital. The Trust believes this withholding tax should be considered as being eligible for a foreign tax credit in the United States for unitholders who hold their units in a taxable account. No portion of the withholding tax is creditable to those unitholders who hold their units in a tax deferred account (such as an IRA).

Based upon the Trust's current outlook, it is expected that the distributions in 2010 will be treated as 100% return on capital (taxable income) and no portion of the distributions will be considered return of capital (tax deferred) for United States income tax purposes.

2008

This information is not exhaustive of all possible U.S. income tax considerations, but is a general guideline and is not intended to be legal or tax advice to any particular holder or potential holder of Baytex trust units. Holders or potential holders of Baytex trust units should consult their own legal and tax advisors as to their particular tax consequences of holding Baytex trust units as well as to determine whether claiming a credit or deduction for foreign income taxes is more beneficial for them. Baytex has not received a letter ruling from the Internal Revenue Service or an opinion from its tax advisors on these matters.

For the 2008 taxation year, the Trust has calculated that all 2008 distributions are taxable as dividends. None of the 2008 distributions are a tax deferred reduction to the cost base of units for tax purposes. The Trust is of the view that the dividends should qualify for the tax rate of 15%.

The Trust is treated as a foreign corporation for United States tax purposes. For unitholders resident in the United States, taxability of distributions is calculated using U.S. tax rules which allow for various deductions including accounting based depletion. The taxable portion of the monthly distribution is determined annually by the Trust based upon current and accumulated earnings in accordance with U.S. tax law. The taxable portion is considered a dividend for tax reporting purposes and U.S. unitholders should receive a Form 1099 or facsimile detailing the total distribution received, the amount withheld, and the taxable portion. Some unitholders will receive a Form 1099 from their brokers and others may not. Information on the Form 1099 issued by the brokers may not accurately reflect the information in this press release for a variety of reasons. Investors should consult their brokers and tax advisors to ensure that the information presented here is accurately reflected on their tax returns. Brokers may or may not be required to issue an amended Form 1099.

The non-taxable portion of the cash distribution, if any, is treated as a return of the cost base. This cost base is reduced by this accumulated amount when computing gains or losses at time of disposition. Once the full amount of the cost base has been recovered, any additional non-taxable distributions should be reported as capital gains.

Unitholders who are not residents of Canada for income tax purposes are encouraged to seek advice from a qualified tax advisor in the country of residence for the tax treatment of distributions. Under Canadian tax legislation, monthly distributions paid by Baytex to non-residents of Canada are subject to a flat 15% withholding tax, regardless of the character of the distribution as return on capital or return of capital. The Trust believes this withholding tax should be considered as being eligible for a foreign tax credit in the United States for unitholders who hold their units in a taxable account. No portion of the withholding tax is creditable to those unitholders who hold their units in a tax deferred account (such as an IRA).

Based upon the Trust's current outlook, it is expected that the distributions in 2009 will be treated as 100% return on capital (taxable income) and no portion of the distributions will be considered return of capital (tax deferred) for United States income tax purposes.

2007

This information is not exhaustive of all possible U.S. income tax considerations, but is a general guideline and is not intended to be legal or tax advice to any particular holder or potential holder of Baytex units. Holders or potential holders of Baytex units should consult their own legal and tax advisors as to their particular tax consequences of holding Baytex units as well as to determine whether claiming a credit or deduction for foreign income taxes is more beneficial for you.

For the 2007 taxation year, the Trust has calculated that all 2007 distributions are taxable as dividends. None of the 2007 distributions are a tax deferred reduction to the cost of units for tax purposes. The Trust is of the view that the dividends qualify for the tax rate of 15%.

The Trust is treated as a foreign corporation for United States tax purposes. For unitholders resident in the United States, taxability of distributions is calculated using U.S. tax rules which allow for various deductions including accounting based depletion. The taxable portion of the monthly distribution is determined annually by the Trust based upon current and accumulated earnings in accordance with U.S. tax law. The taxable portion is considered a dividend for tax reporting purposes and U.S. unitholders should receive a Form 1099 or facsimile detailing the total distribution received, the amount withheld, and the taxable portion. Some unitholders will receive 1099s from their brokers and others may not. Information on the 1099s issued by the brokers may not accurately reflect the information in this press release for a variety of reasons. Investors should consult their brokers and tax advisors to ensure that the information presented here is accurately reflected on their tax returns.

The non-taxable portion of the cash distribution, if any, is treated as a return of the cost base. This cost base is reduced by this accumulated amount when computing gains or losses at time of disposition. Once the full amount of the cost base has been recovered, any additional non-taxable distributions should be reported as capital gains.

Unitholders who are not residents of Canada for income tax purposes are encouraged to seek advice from a qualified tax advisor in the country of residence for the tax treatment of distributions. Under Canadian tax legislation, monthly distributions paid by Baytex to non-residents of Canada are subject to a flat 15% withholding tax, regardless of the character of the distribution as return on capital or return of capital. The Trust believes this withholding tax should be considered as being eligible for a foreign tax credit in the United States for unitholders who hold their units in a taxable account. No portion of the withholding tax is creditable to those unitholders who hold their units in a tax deferred account (such as an IRA).

2006

This information is not exhaustive of all possible U.S. income tax considerations, but is a general guideline and is not intended to be legal or tax advice to any particular holder or potential holder of Baytex units. Holders or potential holders of Baytex units should consult their own legal and tax advisors as to their particular tax consequences of holding Baytex units as well as to determine whether claiming a credit or deduction for foreign income taxes is more beneficial for you.

For the 2006 taxation year, the Trust has calculated that all 2006 distributions are taxable as dividends. None of the 2006 distributions are a tax deferred reduction to the cost of units for tax purposes. The Trust is of the view that the dividends qualify for the tax rate of 15%.

The Trust is treated as a foreign corporation for United States tax purposes. For unitholders resident in the United States, taxability of distributions is calculated using U.S. tax rules which allow for various deductions including accounting based depletion. The taxable portion of the monthly distribution is determined annually by the Trust based upon current and accumulated earnings in accordance with U.S. tax law. The taxable portion is considered a dividend for tax reporting purposes and U.S. unitholders should receive a Form 1099 or facsimile detailing the total distribution received, the amount withheld, and the taxable portion. Some unitholders will receive 1099s from their brokers and others may not. Information on the 1099s issued by the brokers may not accurately reflect the information in this press release for a variety of reasons. Investors should consult their brokers and tax advisors to ensure that the information presented here is accurately reflected on their tax returns.

The non-taxable portion of the cash distribution, if any, is treated as a return of the cost base. This cost base is reduced by this accumulated amount when computing gains or losses at time of disposition. Once the full amount of the cost base has been recovered, any additional non-taxable distributions should be reported as capital gains.

Unitholders who are not residents of Canada for income tax purposes are encouraged to seek advice from a qualified tax advisor in the country of residence for the tax treatment of distributions. Under Canadian tax legislation, monthly distributions paid by Baytex to non-residents of Canada are subject to a flat 15% withholding tax, regardless of the character of the distribution as return on capital or return of capital. The Trust believes this withholding tax should be considered as being eligible for a foreign tax credit in the United States for unitholders who hold their units in a taxable account. No portion of the withholding tax is creditable to those unitholders who hold their units in a tax deferred account (such as an IRA).

2005

This information is not exhaustive of all possible U.S. income tax considerations, but is a general guideline and is not intended to be legal or tax advice to any particular holder or potential holder of Baytex units. Holders or potential holders of Baytex units should consult their own legal and tax advisors as to their particular tax consequences of holding Baytex units as well as to determine whether claiming a credit or deduction for foreign income taxes is more beneficial for you.

For the 2005 taxation year, the Trust has calculated that all 2005 distributions are taxable as dividends. None of the 2005 distributions are a tax deferred reduction to the cost of units for tax purposes. The Trust is of the view that the dividends qualify for the tax rate of 15%.

The Trust is treated as a foreign corporation for United States tax purposes. For unitholders resident in the United States, taxability of distributions is calculated using U.S. tax rules which allow for various deductions including accounting based depletion. The taxable portion of the monthly distribution is determined annually by the Trust based upon current and accumulated earnings in accordance with U.S. tax law. The taxable portion is considered a dividend for tax reporting purposes and U.S. unitholders should receive a Form 1099 or facsimile detailing the total distribution received, the amount withheld, and the taxable portion. Some unitholders will receive 1099s from their brokers and others may not. Information on the 1099s issued by the brokers may not accurately reflect the information in this press release for a variety of reasons. Investors should consult their brokers and tax advisors to ensure that the information presented here is accurately reflected on their tax returns.

The non-taxable portion of the cash distribution, if any, is treated as a return of the cost base. This cost base is reduced by this accumulated amount when computing gains or losses at time of disposition. Once the full amount of the cost base has been recovered, any additional non-taxable distributions should be reported as capital gains.

Unitholders who are not residents of Canada for income tax purposes are encouraged to seek advice from a qualified tax advisor in the country of residence for the tax treatment of distributions. Under Canadian tax legislation, monthly distributions paid by Baytex to non-residents of Canada are subject to a flat 15% withholding tax, regardless of the character of the distribution as return on capital or return of capital. The Trust believes this withholding tax should be considered as being eligible for a foreign tax credit in the United States for unitholders who hold their units in a taxable account. No portion of the withholding tax is creditable to those unitholders who hold their units in a tax deferred account (such as an IRA).

2004

This information is not exhaustive of all possible U.S. income tax considerations, but is a general guideline and is not intended to be legal or tax advice to any particular holder or potential holder of Baytex units. Holders or potential holders of Baytex units should consult their own legal and tax advisors as to their particular tax consequences of holding Baytex units as well as to determine whether claiming a credit or deduction for foreign income taxes is more beneficial for you.

For the 2004 taxation year, the Trust has calculated that all 2004 distributions are taxable as dividends. None of the 2004 distributions are a tax deferred reduction to the cost of units for tax purposes. The Trust is of the view that the dividends qualify for the tax rate of 15%.

The Trust is treated as a corporation for United States tax purposes. For unitholders resident in the United States, taxability of distributions is calculated using U.S. tax rules which allow for various deductions including accounting based depletion. The taxable portion of the monthly distribution is determined annually by the Trust based upon current and accumulated earnings in accordance with U.S. tax law. The taxable portion is considered a dividend for tax reporting purposes and U.S. unitholders should receive a Form 1099 or facsimile detailing the total distribution received, the amount withheld, and the taxable portion. The Trust is not required to file a Form 1099 and is providing this information in lieu of that requirement. Some unitholders will receive 1099s from their brokers and others may not. Information on the 1099s issued by the brokers may not accurately reflect the information in this press release for a variety of reasons. Investors should consult their brokers and tax advisors to ensure that the information presented here is accurately reflected on their tax returns.

The non-taxable portion of the cash distribution, if any, is treated as a return of the cost base. This cost base is reduced by this accumulated amount when computing gains or losses at time of disposition. Once the full amount of the cost base has been recovered, any additional non-taxable distributions should be reported as capital gains.

Unitholders who are not residents of Canada for income tax purposes are encouraged to seek advice from a qualified tax advisor in the country of residence for the tax treatment of distributions. Under Canadian tax legislation, monthly distributions payable to non-residents of Canada are normally subject to a withholding tax of 25% as prescribed by the Income Tax Act of Canada. This withholding tax may be reduced in accordance with reciprocal tax treaties, and in the case of the Tax Treaty between Canada and the United States, the withholding tax for residents of the United States is normally reduced to 15%. U.S. taxpayers may be eligible for a foreign tax credit with respect to the Canadian withholding taxes paid.

2003

For the 2003 taxation year, the Trust has calculated that all 2003 distributions are taxable as dividends. None of the 2003 distributions are a tax deferred reduction to the cost of units for tax purposes. The Trust is of the view that the dividends qualify for the lower U.S. tax rate of 15%.

The Trust is treated as a corporation for United States tax purposes. For unitholders resident in the United States, taxability of distributions is calculated using U.S. tax rules which allow for various deductions including accounting based depletion. The taxable portion of the monthly distribution is determined annually by the Trust based upon current and accumulated earnings in accordance with U.S. tax law. The taxable portion is considered a dividend for tax reporting purposes and U.S. unitholders should receive a Form 1099 or facsimile detailing the total distribution received, the amount withheld, and the taxable portion. The Trust is not required to file a Form 1099 and is providing this information in lieu of that requirement. Some unitholders will receive 1099s from their brokers and others may not. Information on the 1099s issued by the brokers may not accurately reflect the information in this press release for a variety of reasons. Investors should consult their brokers and tax advisors to ensure that the information presented here is accurately reflected on their tax returns.

The non-taxable portion of the cash distribution, if any, is treated as a return of the cost base. This cost base is reduced by this accumulated amount when computing gains or losses at time of disposition. Once the full amount of the cost base has been recovered, any additional non-taxable distributions should be reported as capital gains.

Unitholders who are not residents of Canada for income tax purposes are encouraged to seek advice from a qualified tax advisor in the country of residence for the tax treatment of distributions. Monthly distributions payable to non-residents of Canada are normally subject to a withholding tax of 25% as prescribed by the Income Tax Act of Canada. This withholding tax may be reduced in accordance with reciprocal tax treaties, and in the case of the Tax Treaty between Canada and the United States, the withholding tax for residents of the United States is prescribed at 15%. U.S. taxpayers may be eligible for a foreign tax credit with respect to the Canadian withholding taxes paid.
  
  

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