The following information is intended to assist Canadian individual holders of trust units (“Canadian Individual Unitholder”) of Peak Energy Services Trust (“Peak” or the “Trust”) in reporting distributions received from the Trust during 2007 on their Canada Revenue Agency (“CRA”) T1 General, “Canadian Individual Income Tax Return” (“T1”). This information is directed to a Canadian Individual Unitholder who, for the purposes of the Income Tax Act (Canada) is a resident of Canada and holds Trust units as capital property.

 

 

 

No amounts are to be reported on the Canadian Individual Unitholders’ 2007 T1 for Trust units held within a Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF), Registered Education Savings Plan (RESP) or a Deferred Profit Sharing Plan (DPSP).

 

Canadian Individual Unitholders who hold their Trust units outside of an RRSP, RRIF, RESP or DPSP and were entitled to receive distributions on a distribution record date within the calendar year 2007 will receive a 2007 T3 Statement of Trust Income Allocations and Designations slip (“T3”) directly from Valiant Trust Company or from the investment broker or intermediary who the Canadian Individual Unitholder holds their Trust units through. The deadline for mailing the 2007 T3’s to Canadian Individual Unitholders, as required by the CRA, is March 30, 2008. Peak is not able to provide information on a particular Canadian Individual Unitholder’s T3.

 

The amount reported in Box 26 “Other Income” on the 2007 T3 should be reported on the Canadian Individual Unitholder’s 2007 T1 on line 130 “Other Income”.

 

Canadian Individual Unitholders are required to reduce the adjusted cost base (“ACB”) of their Trust units by the amount reported in Box 42 “Amount Resulting in Cost Base Adjustment” of the 2007 T3, which is equal to the cumulative distributions declared during the 2007 calendar year that the Canadian Individual Unitholder was entitled to less the amount reported as “Other Income” in Box 26 of the 2007 T3. The ACB is then used to determine and report in the Canadian Individual Unitholder’s T1 the capital gain/loss (if any) in the taxation year when the Trust units are disposed or deemed disposed of. If the ACB is reduced to zero, any further reduction to the ACB should be reported by the Canadian Individual Unitholder as a capital gain on the Canadian Individual Unitholder’s T1 in the taxation year that it occurs.

With respect to distributions declared during 2007 to Canadian Individual Unitholders, 97.81 percent should be recorded as other income and 2.19 percent should be recorded as a reduction to the ACB (to the extent of the Canadian Individual Unitholders’ ACB in their respective units). The following schedule details the distributions declared in 2007 and the tax treatment of each distribution per Trust unit for income tax purposes: