Canadian Oil Sands Trust

Canadian Oil Sands Trust

February 28, 2007 23:59 ET

Canadian Oil Sands Trust Provides Tax Information for 2006 Distributions

CALGARY, ALBERTA--(Marketwire - February 28, 2007) - Canadian Oil Sands Trust (TSX:COS.UN) (the "Trust") today reported the tax information for the total cash distributions declared and paid in 2006 to Unitholders resident in Canada and the United States.

Unitholders are strongly encouraged to consult their tax advisors with respect to their particular circumstances.

Canadian tax information for Unitholders resident in Canada

The following information is based on the Trust's understanding of the Income Tax Act (Canada) and regulations thereunder, and is provided for general information only.

No amounts are required to be reported for tax purposes in respect of cash distributions received by a Registered Retirement Savings Plan, Registered Pension Plan, Registered Retirement Income Fund or Deferred Profit Sharing Plan or any other such registered plans ("Deferred Plans"). For cash distributions received by a Canadian resident individual outside of a Deferred Plan, about 97 per cent of the payments are taxable as income. The remaining 3 per cent is a tax-deferred "return of capital", which should be deducted from the adjusted cost base of a holder's units in the Trust.

The following table outlines the breakdown of cash distributions per Unit paid or payable by the Trust with respect to record dates for the year ended December 31, 2006 for Canadian Income Tax purposes.


Cdn$ Tax

Cdn$ Taxable Deferred

Cdn$ Amount Per Amount

Total Cash Unit Per Unit

Distribution (96.97905 (3.02095

Record Date Payment Date Per Unit per cent) per cent)


Nov. 3, 2006 Nov. 30, 2006 0.30 0.29094 0.00906

Aug. 4, 2006 Aug. 31, 2006 0.30 0.29094 0.00906

May 8, 2006 May 31, 2006 0.30 0.29094 0.00906

Feb. 6, 2006(1) Feb. 28, 2006 0.20 0.19396 0.00604



Total 1.10 1.06678 0.03322


(1) Adjusted to reflect the 5:1 Unit split that occurred on May 3, 2006.

T3 Statement of Trust Income Allocations and Designations forms are expected be mailed to the Trust's Unitholders on or before March 31, 2007 by your financial institution if the Units are held in non-registered or nominee form, or by Computershare if the Units are held in registered form.

Tax information for Unitholders resident in the United States

Canadian Oil Sands believes that the distributions paid in the 2006 calendar year are considered foreign-source dividend income under U.S. federal income tax principles. Providing that applicable holder-level requirements are met, these distributions are "qualified dividends" eligible for taxation at reduced rates under U.S. federal income tax legislation; however, Canadian Oil Sands has not received an IRS letter ruling or tax opinion from its tax advisors on these matters, and the individual taxpayer's situation must be considered before making this determination.

Generally, distributions payable to non-residents of Canada are normally subject to a withholding tax of 25 per cent as prescribed by the Income Tax Act (Canada); however, the withholding tax for residents of the United States is prescribed at 15 per cent in accordance with a reciprocal tax treaty between Canada and the United States. U.S. taxpayers may be eligible for a foreign tax credit with respect to the Canadian withholding taxes paid. Other jurisdictions may also have reciprocal tax treaties that would reduce the withholding tax rate.

A Canadian NR4 (non-resident) supplemental form detailing the Canadian tax withheld and remitted to the Canadian government will be mailed to the Trust's non-resident Unitholders by your financial institution if the Units are held in non-registered or nominee form, or by Computershare if the Units are held in registered form.

The following table provides the breakdown of the amount of cash distribution, prior to the Canadian withholding tax, paid by Canadian Oil Sands in 2006, and is provided for information purposes only.


Per cent


Cdn$/ Distri-

US$ US$ Per bution

Currency Equi- cent Return

Cdn$ Exchange valent of of

Distri- Rate on Distri- Distri- Capital/

Record Payment bution Payment bution bution Capital

Date Date Per Unit Date Per Unit Taxable Gain


Nov. 3, 2006 Nov. 30, 2006 0.30 1.1415 0.2628 93.08 6.92

Aug. 4, 2006 Aug. 31, 2006 0.30 1.1066 0.2711 93.08 6.92

May 8, 2006 May 31, 2006 0.30 1.1028 0.2720 93.08 6.92

Feb. 6, 2006(1) Feb. 28, 2006 0.20 1.1380 0.1757 93.08 6.92



Total 1.10 93.08 6.92


It is possible that the U.S. dollar amount was different for non-registered, or beneficial, Unitholders receiving their payment from an intermediary or brokerage firm using different exchange rates.

Tax considerations for DRIP participants

Unitholders also should be aware that participating in the Trust's Premium Distribution, Distribution Reinvestment and Optional Unit Purchase Plan ("DRIP") does not relieve them of any liability for Canadian income taxes, or if they are a non-resident of Canada, for any Canadian withholding taxes that may be payable on the distribution.

For Canadian Unitholders participating in the Premium Distribution option of the Trust's DRIP, the up to an extra two per cent of the declared distribution they received in 2006 is generally considered to be income for tax purposes. Please note the Premium Distribution option is not available to U.S. residents.

Canadian Oil Sands Trust suspended its DRIP on January 31, 2007.

More information on the income tax consequences of participating in the DRIP is available by requesting a copy of the DRIP, or through the Trust's Web site. Unitholders are advised to consult their own tax advisors as to their particular income tax situation regarding all tax-related matters.

For more information

For any questions regarding the supplemental tax forms, please contact your financial institution if your units are held in non-registered form. If your units are held in registered form, contact the Trustee and Transfer Agent, Computershare Trust Company of Canada, at 1-800-564-6253. For all other inquiries, please contact the Trust.

Further information on distributions paid by the Trust, including a tax summary of distributions paid since inception, is available on the Trust's Web site at under investor information, distributions.

Canadian Oil Sands Trust provides a pure investment opportunity in the oil sands through its 36.74 per cent working interest in the Syncrude Project. Located near Fort McMurray, Alberta, Syncrude operates large oil-sands mines and an upgrading facility that produces a light, sweet crude oil. The Trust is an open-ended investment trust managed by Canadian Oil Sands Limited and has approximately 479 million units outstanding, trading on the Toronto Stock Exchange under the symbol COS.UN.

Canadian Oil Sands Limited

Marcel Coutu, President & Chief Executive Officer

Units Listed - Symbol: COS.UN

Toronto Stock Exchange

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