US Tax Information
ARC DIVIDEND PROGRAMS
ARC offers three dividend plans to its shareholders: cash dividends, Dividend Reinvestment Plan (“DRIP”), and Stock Dividend Program (“SDP”). Absent any indication otherwise, ARC shareholders receive their dividends in cash.
US INDIVIDUAL SHAREHOLDERS
The following outlines the general tax considerations that are expected to apply for a US individual shareholder.
This summary is of a general nature only and is not intended to be nor should it be construed to be tax advice to any particular shareholder. Shareholders are encouraged to consult their own tax advisors regarding the tax consequences to them of receiving cash or stock dividends.
- The amount of any cash dividends will be included in computing income in the taxation year in which the cash dividend is received. ARC Resources does not anticipate any portion of the dividend to be a non-taxable return of capital.
- ARC Resources anticipates that its dividends paid to US individual investors will be considered “qualified dividends” from a qualified foreign corporation, eligible for the reduced US federal tax rate applicable to long-term capital gains (in general, up to a maximum rate of 15%) provided the US individual shareholder satisfies the required holding period. Effective January 1, 2013, the tax rate on “qualified dividends” for taxpayers with taxable income in excess of $450,000 for joint filers and $400,000 for single filers was increased to 20%. In addition, effective January 1, 2013, there is a new 3.8% tax applicable to the net investment income of US individual investors whose adjusted gross income for US income tax is in excess of $250,000 for joint filers and $200,000 for single filers.
- US shareholders who are non-residents of Canada and hold their common shares of ARC Resources in a taxable US account will to be subject to Canadian withholding tax. The withholding tax rate is 25%; however, the Canada – US Income Tax Treaty generally reduces the withholding rate on dividends to 15%. In order to be entitled for the reduced withholding tax, a US individual shareholder must provide Form NR301 – “Declaration of Eligibility for Benefits under a Tax Treaty for a Non-Resident Taxpayer” or the equivalent information to the transfer agent, Computershare Trust Company of Canada (“Computershare”) if they are a registered shareholder or to their broker, investment dealer, financial institution, or other nominee as applicable if they are a beneficial shareholder.
- The Canadian withholding tax should be creditable, subject to numerous limitations, for US income tax purposes in the year in which the withholding taxes are withheld.
- Canadian withholding tax should not apply to dividends with respect to US shareholders that hold their common shares of ARC Resources in a registered tax-deferred investment account such as an IRA or 401K.
- US shareholders who are registered shareholders should receive an NR4 – Statement of Amounts Paid or Credited to Non-Residents of Canada (“NR4 slip”) on or before the end of March following the year in which dividends are paid from the transfer agent, Computershare Trust Company of Canada (“Computershare”). The NR4 slip will outline the amount of dividends paid in the calendar year and the amount of Canadian tax withheld. These amounts will be in Canadian dollars and will need to be converted to US dollars at the appropriate exchange rate.
- US shareholders who are beneficial shareholders and hold their shares through a broker, investment dealer, financial institution, or other nominee that is resident in Canada should receive an NR4 slip on or before the end of March following the year in which dividends are paid from the respective intermediary. The NR4 slip will outline the amount of dividends paid in the calendar year and the amount of Canadian tax withheld. These amounts will be in Canadian dollars and will need to be converted to US dollars at the appropriate exchange rate.
- US shareholders who are beneficial shareholders and hold their shares through a broker, investment dealer, financial institution, or other nominee that is not resident in Canada (e.g. a US-based brokerage) should receive a Form 1099-DIV Dividends and Distributions (“Form 1099-DIV”) from the respective intermediary. The Form 1099-DIV will outline the amount of the dividends paid in the calendar year and the amount of foreign taxes paid. The amounts will be in US dollars and will not need to be converted.
Dividend Reinvestment Plan
- US citizens and US residents are not eligible to participate in the DRIP.
Stock Dividend Program
- The amount of the stock dividend for Canadian withholding tax purposes differs from the amount of the stock dividend received for US tax purposes.
- For Canadian tax purposes, the amount of a stock dividend is equal to the amount that ARC Resources adds to its stated capital in respect of the shares that are issued in satisfaction of the dividend. As ARC Resources intends to add only a nominal amount to its stated capital, the amount of the dividend is expected to be nominal. As a result, Canadian withholding tax is not applicable to the stock dividend and no NR4 slip will be issued.
- For US tax purposes, the amount of the stock dividend is generally taxable in the year received for US shareholders who do not hold their investment through a registered tax-deferred investment account such as an IRA or 401K. As ARC Resources does not anticipate any portion of the dividend to be a non-taxable return of capital, the amount of the dividend included in computing income will be determined by the value of the shares received in satisfaction of the dividend. The US tax basis of the shares received should equal the value of the dividend including in computing income.
- ARC Resources anticipates that any stock dividends paid to U.S. individual investors will be considered “qualified dividends”, eligible for the reduced tax rate applicable to long-term capital gains (see additional details regarding tax rates noted under “Cash Dividends”).
Record Date Distribution Payment Date Dist. Paid CDN$ Exchange Rate Dist. Paid US$ Taxable Qualified Dividend US$ Non-Taxable Return of Capital US$ 31/12/2009 15/01/2010 $0.10 0.9721 $0.097210 $0.073685 $0.023525 29/01/2010 15/02/2010 $0.10 0.9542 $0.095420 $0.072328 $0.023092 26/02/2010 15/03/2010 $0.10 0.9788 $0.097880 $0.074193 $0.023687 31/03/2010 15/04/2010 $0.10 0.9986 $0.099860 $0.075694 $0.024166 30/04/2010 17/05/2010 $0.10 0.9611 $0.096110 $0.072851 $0.023259 31/05/2010 15/06/2010 $0.10 0.9720 $0.097200 $0.073678 $0.023522 30/06/2010 15/07/2010 $0.10 0.9613 $0.096130 $0.072867 $0.023263 30/07/2010 16/08/2010 $0.10 0.9586 $0.095860 $0.072662 $0.023198 31/08/2010 15/09/2010 $0.10 0.9726 $0.097260 $0.073723 $0.023537 30/09/2010 15/10/2010 $0.10 0.9893 $0.098930 $0.074989 $0.023941 29/10/2010 15/11/2010 $0.10 0.9935 $0.099350 $0.075307 $0.024043 30/11/2010 15/12/2010 $0.10 0.9965 $0.099650 $0.075535 $0.024115 Total Per Unit $1.20 $1.170860 $0.887512 $0.283348
Downloadable Tax Documentation