Bonterra Confirms New Rules Governing Conversion of Trusts

Bonterra Oil & Gas wishes to inform former unitholders of Bonterra Energy Income Trust who held units of the Fund (Fund Units) at the time of its conversion to the Corporation on November 12, 2008, that they may be eligible to defer any capital gain resulting from the exchange (the "Exchange") of their Fund Units for shares of the Corporation without the need to complete and file any tax election forms. Recently enacted amendments to the Income Tax Act (Canada) (Tax Act) contain new rules governing the conversion of trusts to corporations (Conversion Rules).

The new Conversion Rules provide an automatic tax-deferred exchange of Fund Units for shares in the Corporation if certain conditions are satisfied.

With such conditions having been satisfied and providing that a Former Unitholder has not made an election under section 85 of the Tax Act in respect of the Exchange, a Former Unitholder will generally be considered to have disposed of the Fund Units and to have acquired shares in the Corporation at an amount equal to the cost amount of the Fund Units exchanged, such that no capital gain or loss is realized on the Exchange. A Former Unitholder who wishes to instead make an election under section 85 of the Tax Act in respect of the Exchange may do so, as more particularly described in the Joint Information Circular dated September 17, 2008.

Former Unitholders should consult their own tax advisors for advice with respect to the tax consequences to them of the Exchange with regard to their particular circumstances.


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