Taxation of the Fund

The taxation year of the Fund is the calendar year. In each taxation year, the Fund will be subject to tax under Part I of the Tax Act on its income for tax purposes for the year, including net realized taxable capital gains, less the portion thereof that it deducts in respect of the amounts paid or payable in the year to Unitholders. An amount will be

considered to be payable to a Unitholder in a taxation year if it is paid to the Unitholder in the year by the Fund or if the Unitholder is entitled in that year to enforce payment of the amount.

The Fund will include in its income for each taxation year such amount of the Trust’s income for tax purposes, including net taxable capital gains, as is paid or becomes payable to the Fund in the year in respect of the Trust Units.

The Fund will not be subject to tax on any amount received as a return of capital from the Trust (provided that the capital returned, if any, does not exceed the cost amount of the Trust Units held by the Fund). In computing its income, the Fund may deduct reasonable administrative costs, interest and other expenses, if any, incurred by it for the purpose of earning income.

A distribution of property of the Fund on redemption of Units will be treated as a disposition by the Fund of the property so distributed for proceeds of disposition equal to their fair market value (less the interest, if any, on any Trust Notes disposed of, which will generally be income to the Fund). The Fund will generally realize a capital gain

(or sustain a capital loss) to the extent that the proceeds from the disposition exceed (or are less than) the aggregate of adjusted cost base of the property so distributed and any reasonable costs of disposition.

For more information pertaining to the income tax treatment of WesternOne Trust units and Debenture units, please refer to the WesternOne Prospectus, and refer to the section on Taxation of the Fund, or speak with your professional tax advisor.

Tax Factors