Annual Passive Foreign Investment Company ("PFIC") Declaration
This information is provided for shareholders who are U.S. taxpayers. It may not be relevant for other persons.
ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY ANY PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.
Canada Lithium Corp. ("Canada Lithium") believes that it would be classified as a PFIC for its taxable year ended December 31, 2011.
THE U.S. TAX RULES REGARDING PFICS ARE VERY COMPLEX AND INVESTORS ARE STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISOR REGARDING THE U.S. TAX CONSEQUENCES OF THE PFIC RULES TO YOUR INVESTMENT IN CANADA LITHIUM.
The attached PFIC Annual Information Statements contain information to enable you, should you so choose based on the advice of your tax advisor in light of your personal tax circumstances, to elect to treat any of the Entities as a qualified electing fund ("QEF").
A U.S. shareholder who makes a qualified electing fund election with respect to Canada Lithium is required to annually include in his or her income his or her pro rata share of the ordinary earnings and net capital gains of Canada Lithium, whether or not Canada Lithium distributes any amounts to its shareholders.
If you do not elect to treat an Entity as a qualified electing fund, then if the Entity is a PFIC for any year during your holding period, adverse tax consequences could result to you.
The qualified electing fund election is generally made on Form 8621 ("Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund") on or before the due date, including extensions, for the income tax return with respect to the tax year to which the election relates.
Please consult your personal tax advisor for more information on PFIC status and its implications to you.
2011 PFIC Declaration