THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, NOR SHOULD IT BE CONSTRUED TO BE, LEGAL, BUSINESS OR TAX ADVICE TO ANY PARTICULAR HOLDER. PARAMOUNT ENERGY TRUST RECOMMENDS THAT CANADIAN AND U.S. AND NON-RESIDENT UNITHOLDERS CONSULT THEIR OWN TAX ADVISORS REGARDING THE INCOME TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR PARTICULAR CIRCUMSTANCES.
Adjusted Cost Base ("ACB") Reduction
The Adjusted Cost Base ("ACB") is used in calculating capital gains or losses on the disposition of Trust Units held as capital property by a Unitholder. The ACB of each Trust Unit is reduced by the portion of distributions received, which is not reported on the T3 slip (the "tax-deferred amount described above"). Should a taxpayer's ACB ever be reduced below zero, that negative amount is deemed to be a capital gain of the individual and the ACB is deemed to be nil. The capital gain must be reported on Schedule 3 of your T1 return.
To calculate your adjusted cost base, use the formula below.
ACB = Total cost of Units/# of Units Bought - Return of Capital portion of per unit Distributions received to date