The following summary is not intended to be legal or tax advice to any particular holder of common shares
of Medical Facilities. Holders of common shares (as well as prospective purchasers) should consult their own
tax advisors in determining the application to them of any Canadian federal, provincial, U.S. federal, state,
local, foreign or other tax consequences of the purchase, ownership and disposition of common shares.
Canadian Disclosure
Medical Facilities hereby advises that all of its dividends will be designated as "eligible dividends" for
Canadian income tax purposes, unless indicated otherwise. Canadian resident individuals who receive
"eligible dividends" will be entitled to an enhanced gross-up and dividend tax credit, resulting in a reduction
of income taxes otherwise payable on those dividends.
United States Disclosure
Withholding Tax Considerations
Dividends paid by Medical Facilities to a U.S. shareholder generally will be subject to a 15% Canadian
withholding tax.
Dividends paid by Medical Facilities to a U.S. shareholder that is exempt from tax in the United States may
be exempt from Canadian withholding tax. Such holders should consult their own tax advisors with respect
to the availability of an exemption to Canadian withholding tax pursuant to Article XXI of the Canada-U.S.
Income Tax Convention (the "Canadian Treaty"). U.S. holders that are being subject to Canadian
withholding tax in excess of the amounts set out above are encouraged to consult their own brokers and
confirm that their distributions are being appropriately taxed.
Qualified Dividends
Dividends received by U.S. persons from "qualified foreign corporations" qualify as"qualified dividends"
and, under current legislation, are generally subject to a preferential tax rate if received by a non-corporate
U.S. person that meets the "holding period requirement". The "holding period requirement" requires the
stock to have been held for more than 60 days in the 121-day period that begins 60 days before the
ex-dividend date.
A qualified foreign corporation includes a Canadian corporation that is eligible for the benefits of the
Canadian Treaty. However, the term "qualified foreign corporation" does not include any foreign corporation
that, for the taxable year of the corporation in which the dividend is paid, or the preceding taxable year,
is a passive foreign investment company (PFIC).
Assuming that Medical Facilities is not currently a PFIC and was not a PFIC in the preceding tax year,
dividends on the common shares received by a non-corporate U.S. person meeting the holding period
requirement should be treated as dividends from a "qualified foreign corporation" and therefore eligible for
"qualified dividend" status.