U.S. Tax Information
The tax information on this website is not intended to provide legal and/or tax advice. Shareholders are encouraged to consult a professional advisor as to their particular tax consequences of holding Penn West shares.
Penn West is a “qualified foreign corporation” for the purposes of the reduced U.S. capital gains tax rate of 15% applicable to “qualified dividends” paid by U.S. domestic corporations and qualified foreign corporations. This reduced tax rate is subject to certain holding period requirements.
Penn West anticipates that dividends paid to shareholders who hold their shares in taxable U.S. accounts will be 100% taxable as qualified dividends and no portion of the dividend will be considered a non-taxable return of capital. Information relating to the taxable amount of dividends paid by Penn West will be communicated annually to U.S. shareholders on Form 1099-DIV (or similar substitute form) prepared by their broker (or other intermediary). Registered shareholders will receive their Form 1099-DIV directly from our transfer agent, Canadian Stock Transfer Company (“CST”). Penn West does not prepare or furnish shareholders with Form 1099-DIV.
For Penn West shares held within a qualified retirement plan such as an IRA or other U.S. tax-exempt account, no amount should be reported as taxable income and Canadian withholding tax (as described below) should no longer apply to dividend payments in respect of these shares.
Dividends paid to shareholders who hold Penn West shares in taxable U.S. accounts are subject to Canadian withholding tax at a rate of 25%. This rate is reduced to 15% under the Canada-U.S. Tax Treaty. To be eligible for the reduced withholding rate under the tax treaty, Canada Revenue Agency (“CRA”) now requires certain information be provided by the dividend recipient for any payments made after December 31, 2012.
To facilitate the provision of this information, the CRA has issued 3 new forms:
NR301 – “Declaration of Eligibility for Benefits under a tax treaty for a Non-Resident Taxpayer”
NR302 – “Declaration of Eligibility for Benefits under a tax treaty for a Partnership with Non-Resident Partners”
NR303 – “Declaration of Eligibility for Benefits under a tax treaty for a Hybrid Entity”
The use of these forms is not mandatory and equivalent information may be provided by way of letter or other means. Completed forms should be provided directly to your broker (or other intermediary) to ensure eligibility for the reduced withholding rate under the respective tax treaty. In many cases, brokers have already requested this information from our shareholders. Registered non-resident Penn West shareholders will have received a request to complete the applicable CRA form directly from CST.
These forms are not to be sent to Penn West or filed with the CRA, they should be completed and returned to your broker (or other intermediary). Any questions with respect to withholding tax should be made to your broker (or other intermediary) as they are responsible for withholding and remitting the appropriate amount of tax.