Tax Information

Tax Deferral on Distributions1

Our distributions are paid on a monthly basis and the current annual distribution rate will be $0.40.

Dream Hard Asset Alternatives Trust (“DAT” or the “Trust”) is a taxable SIFT Trust which requires the Trust to pay tax at the entity level. A taxable Canadian holder of DAT Units is generally required to include the taxable income received from the Trust in his or her income tax return. The taxable portion of the distribution has to be included even if the distribution is reinvested under the Distribution Reinvestment Plan.

  • Canadian Unitholders will receive a Statement of Trust Income Allocations and Designations (T3) for income tax purposes. You should receive a statement either from your financial institution or stockbroker if you hold your units in an account or directly from DAT’s transfer agent, Computershare Trust Company of Canada, if you are a registered Unitholder and are in possession of a unit certificate.
  • Non-resident Unitholders should receive a Statement of Amounts Paid or Credited to Non-Residents of Canada (NR4) with the taxable income reported in box 16 and the non-resident tax withheld shown in box 17.

Renewable power and real estate assets generate tax depreciation often sufficient to shelter their income and, as a result, distributions may exceed taxable income, resulting in a portion of such distributions being treated as a return of capital for tax.

Management estimates that, of the monthly cash distributions to be made by DAT to Unitholders, approximately 75% in 2014 will be tax deferred by reason of our ability to claim depreciation and certain other deductions. Further, the taxable portion of the distributions of the Trust are taxed at the eligible dividend rate.2

The adjusted cost base of DAT units held by a Unitholder will generally be reduced by the non-taxable portion of distributions made. A Unitholder will generally realize a capital gain to the extent that the adjusted cost base of the Unitholder’s Units becomes a negative amount, even if the Unitholder has not sold any Units.


Example of Tax Treatment in 2014

John purchases 100 units of DAT units on January 1, 20XX at $10.00/unit for $1,000. Assuming a reported Return of Capital of 75%, the computation for taxable income and capital gain for a fully taxable Unitholder would be as follows:

Adjusted Cost Base (ACB) of DAT units on Jan 1, 20XX ($10unit) $1,000.00
Annual Distribution @ $0.40/unit $ 40.00
Portion of Annual Distribution reported as Return of Capital (75%) $ 30.00
Portion of Annual Distribution reported as an Eligible Dividend (25%) $ 10.00
ACB of DAT units on Dec 31, 20XX (=$1,000 – $30) $ 970.00
1 Our tax comments, including the illustration below are general in nature only and are not intended to be nor should they be considered to be legal or tax advice to any prospective, actual, or former Unitholder.  Prospective, actual or former Unitholders should always consult their own professional tax advisors for advice on the tax consequences of an investment in, or disposition of our Units.
2 The portion of our distributions that is tax deferred will most likely change over time thus affecting the after-tax return to a Unitholder.


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