Response from HOT.un ........ re the characterization of the deferred distribution - see below.
The not-so-good news: the amount will be included on a revised T5013 form for 2020 and will necessitate a refiling for that year.
The good news: As I anticipated the amount will be 100% Return of Capital so there will be no tax implications. Hopefully, this is clearly communicated to the brokers - so they don't ding us for a 15% IRS WHT.
Both of these comments are only applicable to distributions received in a non-registered account.
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- Given the date of record is 31 March 2020 but the distribution was payable on 31 Dec. 2021, will this distribution (in a non registered account) be considered income for 2020 (necessitating a refiling of 2020 tax documentation) or for 2021 (considering the 21 month delay interval)?
RESPONSE: there were losses in both 2020 and 2021, therefore the distribution payment would be return of capital. The loss allocation to investors for 2020 would have already been reported on the T5013 for the year.
We are working with CDS on the presentation of the T5013 slips but we expect notation to show that this payment is a return of capital (with the distribution record date March 2020 and payment date Dec 2021 )
- Assuming that - and please correct me if I'm wrong - the distribution will be 100% Return of Capital (as were the Jan. and Feb. 2020 cash distributions), have Canadian brokers been advised in advance of this so that we can avoid the unpleasant and unnecessary levy of 15% IRW Withholding Tax by brokers on the deferred/delayed distribution?
RESPONSE: That is correct – 100% return of capital.