Daylight Energy Ltd.

Daylight Energy Ltd.

March 02, 2011 17:52 ET

Daylight Energy Provides 2010 Tax Information for Canadian Shareholders

CALGARY, ALBERTA--(Marketwire - March 2, 2011) - Daylight Energy Ltd. ("Daylight") (TSX:DAY) is pleased to provide 2010 tax information for its Canadian shareholders.

The information contained herein is intended to provide general guidance to assist in 2010 income tax reporting for Canadian resident individuals. It is not intended to constitute legal or tax advice to any investor or potential investor. Readers should consult their own legal or tax advisors as to their particular tax consequences and reporting obligations.

On May 7th, 2010, Daylight Resources Trust (the "Trust") converted from a trust to a corporation, named Daylight Energy Ltd. Unitholders of the Trust received, for each trust unit held, one common share of Daylight. A Canadian taxpayer will be deemed to have disposed of its trust units at their adjusted cost base ("ACB"); therefore, the conversion should not trigger a capital gain or loss. Following the conversion, the Trust discontinued cash distributions and Daylight commenced paying cash dividends with the final trust distribution paid on May 17, 2010 to unitholders of record on April 30, 2010. 


Effective for the cash dividend paid on June 15, 2010 to shareholders of record on May 31, 2010, Daylight will designate all dividends paid on its common shares as "eligible dividends" to the extent permitted under the Income Tax Act of Canada (the "Tax Act") such that shareholders who are Canadian resident individuals will benefit from the enhanced gross-up and dividend tax credit mechanism under the Tax Act. This designation will apply until Daylight otherwise notifies its shareholders.

Shareholders who received dividends from Daylight for the 2010 calendar year should receive a "T5 Supplementary" slip directly from their broker, other intermediary or from Daylight's transfer agent (if they were registered shareholders). The deadline for mailing all T5 Supplementary Information slips to Shareholders is February 28, 2011, as required under the Tax Act.

A historic listing of dividends declared and paid by Daylight can be found on Daylight's website.


The following information applies to shareholders who participated ("Participant") in Daylight's Dividend Reinvestment and Optional Common Share Purchase Plan (the "Plan"). 

The reinvestment of dividends under the Plan does not relieve a Participant of any liability for income taxes that may otherwise be payable in respect of the cash dividends reinvested in new shares under the Plan.

On each dividend payment date, Participants will be treated, for tax purposes, as having received a taxable dividend equal to the amount of the cash dividend otherwise payable. The dividend will be subject to the same tax treatment accorded to taxable dividends received by the Participant from a taxable Canadian corporation (i.e. the amount of the dividend payable will be subject to the gross-up and dividend tax credit rules contained in the Tax Act).

The CRA generally takes the position that the amount, if any, by which the fair market value of any shares acquired pursuant to a dividend reinvestment plan exceeds the purchase price need not be included in the income of the shareholder provided that the amount paid is not less than 95% of the share's fair market value, which is the case under the dividend reinvestment component of the Plan.

The new shares acquired will have an initial cost for tax purposes equal to the cash equivalent amount of the dividend. Shareholders are responsible for calculating and monitoring the ACB of their shares for income tax purposes. For the purposes of determining the amount of any capital gain (or loss) which may result from the disposition of shares, the ACB of the shares owned by a Participant at a particular time will be the average cost of all shares owned by the Participant at that time, whether acquired through the Plan or otherwise acquired outside the Plan.

The Plan provides a further description of certain Canadian federal income tax considerations relevant to participation in the Plan. The description is, however, a summary only and does not constitute legal or tax advice to any particular shareholder. You are urged to consult your own tax advisors concerning the implications of your participation in the Plan having regard to your particular circumstances.


Distributions paid by the Trust can be either tax-deferred (return of capital) or taxable (income). Unitholders who received cash distributions for the 2010 calendar year should receive a "T3 Supplementary" slip directly from their broker, other intermediary or from Daylight's transfer agent (if they were registered unitholders). The T3 Supplementary will indicate the unitholder's total cash distributions received for the 2010 calendar year and its allocation between income and return of capital. The deadline for mailing all T3 Supplementary Information slips to unitholders is March 31, 2011, as required under the Tax Act.

From January to April 2010, the Trust made cash distributions totaling $0.32 per unit. The following table provides the breakdown for Canadian income tax purposes of cash distributions on a per unit basis.

Record Date   Payment Date   Total Distribution   Taxable Amount   Return of Capital Amount
January 29, 2010   February 15, 2010   $ 0.08   $ 0.00   $ 0.08
February 26, 2010   March 15, 2010   $ 0.08   $ 0.00   $ 0.08
March 31, 2010   April 15, 2010   $ 0.08   $ 0.00   $ 0.08
April 30, 2010   May 17, 2010   $ 0.08   $ 0.00   $ 0.08
Total       $ 0.32   $ 0.00   $ 0.32

Units Held outside an TFSAs, RRSPs, RRIFs, RESPs or DPSPs

Daylight has determined that 100% of the trust distributions from January to April 2010 are a tax-deferred return of capital.

Unitholders are required to reduce the ACB of their units by the cumulative return of capital portion of the distributions. The ACB of a unit generally equals the purchase price of the unit (including commissions) less any return of capital (tax deferred) distributions received or receivable from the date of acquisition. To the extent the ACB of a trust unit is negative, unitholders should report such amount as a capital gain in their income tax return and the unitholder's ACB will be reset to zero.

The ACB is used in calculating capital gains and losses on the disposition of the trust units if the trust units were held as capital property by the owner. On conversion from a trust to a corporation, the initial ACB of the Daylight common shares received by former unitholders is generally equal to the ACB of their trust units on May 7, 2010.

Units Held within an TFSAs, RRSPs, RRIFs, RESPs or DPSPs

The Trust qualified as a mutual fund trust under the Tax Act and therefore trust units of the Trust are qualified investments for Tax Free Savings Accounts ("TFSAs"), Registered Retirement Savings Plans ("RRSPs"), Registered Retirement Income Funds ("RRIFs"), Registered Education Savings Plans ("RESPs"), and Deferred Profit Sharing Plans ("DPSPs").

Individuals who held their units in TFSAs, RRSPs, RRIFs, RESPs or DPSPs should not report any amount on their 2010 Income Tax Return.

Daylight is a growing intermediate oil and natural gas producing company with a high quality suite of resource play assets in Western Canada. Our highly focused team utilizes our technical expertise in exploitation, development, and acquisitions to create long-term value for our shareholders. Our team has developed a multi-year inventory of repeatable, low risk exploitation resource play projects with substantial potential reserve additions on assets we currently own and control in the premier Pembina Cardium light oil fairway and in the premier Deep Basin area of Alberta and British Columbia.

Daylight has approximately 210 million common shares outstanding which trade on the TSX under the symbol DAY. Daylight Series C and D convertible debentures trade on the TSX under the symbols DAY.DB.C and DAY.DB.D, respectively.

Contact Information