General Tax Information

The following information provides a general explanation of the Canadian and U.S. tax treatment of holding units of American Hotel Income Properties REIT LP (AHIP).

This summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any particular unitholder of AHIP, and no representation with respect to the Canadian or U.S. income tax consequences to any particular unitholder is made. Therefore, unitholders of AHIP units are encouraged to consult their own tax advisors for advice with respect to their particular circumstances.

Unitholders should also review AHIP’s public disclosures in their entirety as published on the SEDAR website at sedar.com

As required under relevant tax rules, U.S. withholding tax was remitted for taxable unitholders to the Internal Revenue Service in the United States based on management’s estimates. The actual breakdown between return of capital and dividend income for U.S. and Canadian tax purposes for 2016 is:

Year

Return

of capital

Taxable Total
2016 – % 37.97% 62.03% 100.00%
2016 – $ $0.328 $0.535 $0.863

Overview

AHIP is a Canadian-based limited partnership that is publicly traded and is treated as a partnership for Canadian and U.S. tax purposes. As such, AHIP is a “flow through” entity for Canadian and U.S. tax purposes and is not subject to tax. Income of AHIP is allocated to and is subject to tax in the hand of its unitholders.

AHIP does not earn active business income. Instead, AHIP receives investment income, such as dividends, and return of capital from subsidiary corporations that carry on business in the United States. Income for Canadian and U.S. tax purposes is likely to be different due to the difference in currencies used to compute income and tax legislation of the two countries. Taxable income may be less than the distribution for a particular period due to returns of capital paid by AHIP in that period. The computation of AHIP’s Canadian and U.S. income for tax purposes allocated to the unitholders for a particular taxation year is independent of (i) the annual accounting net income of AHIP; (ii) the annual cash flow generated by AHIP and (iii) the annual distributions.

Eligibility for Canadian Tax-Deferred Plans

An AHIP unit is a qualified investment for RRSPs, deferred profit sharing plans, RRIFs, registered education savings plans, registered disability savings plans and TFSAs.

U.S. Withholding Tax

The income AHIP earns from its underlying subsidiary is US-source dividends paid by such subsidiary. Such dividends are subject to U.S. withholding tax. As AHIP is a "flow-through" entity for Canadian and U.S. income tax purposes, a portion of the income may be subject to U.S. withholding taxes (including back-up withholding tax). The rate of withholding varies depending on, amongst other factors, a unitholder’s country of tax residence, type of ownership account, and whether a unitholder provided his/her broker with the appropriate Internal Revenue Service (“IRS”) Form (for example, Form W-8BEN, W-ECI, W-8EXP, W-8IMY or W-9). The type of documentation for U.S. withholding tax purposes will differ depending on a unitholder’s tax profile for U.S. tax purposes. We encourage unitholders to submit the appropriate IRS Form to their broker so their account can be (and will continue to be) certified and the most appropriate rates of withholding can be applied to distributions.

As required under relevant tax rules, U.S. withholding tax was remitted for taxable unitholders to the Internal Revenue Service in the United States based on management’s estimates. The actual breakdown between return of capital and dividend income for U.S. and Canadian tax purposes will be determined and posted once year-end tax information becomes available.

Computation of Tax Cost (Adjusted Cost Basis)

For Canadian and U.S. resident unitholders, in general, a unitholder's tax cost of his/her AHIP units should equal the sum of (i) the amount paid to acquire the units and (ii) the net income for tax purposes allocated to the unitholder, less the cash distributions received.

The schedules distributed with 2016 Schedule K1 (Form 1065) compute the tax cost of AHIP units for U.S. resident unit holders.

Annual Tax Reporting for Unitholders

After the end of AHIP’s taxation year (December 31), the Canadian and U.S. taxable income of AHIP is determined and allocated to all unitholders, who in turn are required to report such income on their respective tax returns. The allocation of U.S. taxable income is communicated using Schedule K-1 (not a Form 1099). The allocation of Canadian taxable income is communicated using Form T5013 (not a Form T5).

Canadian Unitholders

The actual breakdown between return of capital and dividend income for U.S. and Canadian tax purposes is:

U.S. Tax information – click here

Canadian Tax Information – click here

Year

Return

of capital

Taxable Total
2016 – % 37.97% 62.03% 100.00%
2016 – $ $0.328 $0.535 $0.863

2016 CDS File

The information included in the above CDS posting does not include U.S. tax withheld by brokers in respect of their clients who are unitholders of AHIP. Canadian dollar equivalent of the amount of U.S. tax withheld should be obtained from the brokers and reported in Box 171 "foreign tax paid on non-business income" of T5013. U.S. withholdings tax reported in Box 171 of T5013 relates solely to "foreign dividend and interest income" reported in Box 135 of T5013.

U.S. Unitholders

Schedule K-1

AHIP is required to use reasonable efforts to send a Schedule K-1 to all unitholders who are U.S. residents or who may have U.S. tax reporting obligations.

If you are a U.S. unitholder please see the below PDFs for further information on how to obtain your Schedule K1 and related frequently asked questions.

U.S. Resident Tax Package Information

2016 Schedule K1 (Form 1065)

Frequently Asked Questions

Form 8937

Effective January 1, 2011 issuers of corporate stock must begin reporting corporate actions that affect stock basis, including but not limited to mergers, stock splits, stock dividends, recapitalizations and distributions in excess of corporate earnings and profits. The following information is intended to meet the requirements of public disclosure pursuant to Section 6045B for American Hotel Income Properties REIT Inc. The Internal Revenue Service issued Form 8937 for reporting corporate actions.

Tax Year 2016 Form

Tax Year 2015 Form

Tax Year 2014 Form

Non-North American Unitholders

Generally, a non-North American holder of AHIP units will not receive any tax reporting forms (i.e. Form T5013 or Schedule K-1).

Note: The information provided on this website does not constitute tax advice and is not intended to be a substitute for tax planning. Investors are encouraged to consult their tax advisors concerning the income tax consequences particular to their receipt, ownership and disposition of units, as well as any consequences under the laws of any other taxing jurisdiction.