American Hotel Income Properties REIT 6 00 Convertible Unsecured Subordinated Debentures T.HOT.DB.V

Response from HOT.un ....

[CanSiamCyp]

.... 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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1. 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 )
 

2. 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.

[Investorguy123]

Thanks, 100 % ROC, would be a good news to me, no 15% withholding tax. Because it is 100% ROC, that means there is no tax involved anyway whether you file tax return or not. But you should include it to reduce the cost when you sold the units.

[CanSiamCyp]

You are correct! But the thing to keep an eye on is whether your broker charges the 15% IRS WHT anyway - which they should not do but who knows if they are adequately informed by HOT.UN re the RoC characterization. The problem with the IRS WHT is that once they ding you for this amount - there is no retroactive reimbursement. I "lost" over $800 in 2019 due to BMO withholding 15% every

[Investorguy123]

You are right. Hopefully, from now on HOT.UN will stick to 60% dividend and 40% ROC. Then we will not have the headache of getting 15% withholding tax back. Current $0.18 annual dividend payout should be sustainabule to maintain the ratio.

[babedinkleman]

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[scarface9]

Did you sell your shares? If not, since it's 100% ROC you would just change your ACB.  But if you sold, I guess you're in for an annoyance of refiling.

[babedinkleman]

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[CanSiamCyp]

Hey BD! Like you I sold my HOT.un position (in Jan. 2021) but still recvd the deferred distn from March 2020 on 31 Dec. 2021. I contacted the help desk at WealthSimpleTax ... and share their response (as summarized by me) for your benefit. In essence, if - repeat if - the recently received amount is 100% Return of Capital, one could skip the refiling and merely adjust the ACB of HOT.un for the

[babedinkleman]

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[Sunnyboy]

I also just noticed the div. Got $603.46. Lucky for me I was holding it in my RSP account. 2020 the year we were going to hit a $10.00 SP again..............Been in and out a couple of times since but not holding at the moment.