The tax information relating to the Aurora-Cannimed takeover has been posted. More information that most people likely won't read. It certainly creates a bias that those not wanting to deal with tax implications will select option 1, the "all shares" transaction to avoid all of this. It appears to can ignore all of this if you are holding in a registered account (TFSA or RRSP).
"An Eligible Holder who desires to realize a portion only of the gain or loss is urged to consult their own tax advisors in this regard, including with respect to the possibility of making this joint tax election."
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A1. Unless they wish to realize a portion of the gain, a Resident Holder who elects the Share Alternative, or who makes no election and is deemed to have elected the Share Alternative, and who in either event receives only Aurora Shares and no cash (except for cash in lieu of a fractional share, if applicable), a capital gain that would otherwise be realized on the exchange of a CanniMed Share for an Aurora Share may be automatically deferred under the provisions of section 85.1 of the Tax Act and a Joint Tax Election. You should review “Disposition of CanniMed Shares Pursuant to the Offer – Exchange of CanniMed Shares for Aurora Shares only or a Combination of Aurora Shares and Cash – No Tax Election” in the Notice for additional details.
A Resident Holder who desires to realize a portion only of the gain (or loss) is urged to consult their own tax advisors in this regard, including with respect to the possibility of making a Tax Election. You should also review “Disposition of CanniMed Shares Pursuant to the Offer – Exchange of CanniMed Shares for Aurora Shares only or a Combination of Aurora Shares and Cash – Tax Election” in the Notice.
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A2. If you are a registered shareholder (meaning that you either had a physical certificate or direct registration statement representing your CanniMed Common Shares), Laurel Hill Advisory Group ("the Depositary") may be able to provide you with this information. If you held your CanniMed Common Shares in an account with an investment dealer or broker, they may be able to provide you with this information. Alternatively, this information should be on your brokerage statement for the period that includes the Take-Up Date.
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A3. In no event shall a Former CanniMed Shareholder be entitled to receive a fractional Aurora Common Share. Where the aggregate number of Aurora Common Shares to be issued to a Shareholder pursuant to the Offer would otherwise result in a fraction of an Aurora Common Share being issuable: (a) the number of Aurora Common Shares to be received by such Shareholder shall be rounded down to the nearest whole Aurora Common Share; and (b) such Shareholder shall receive a cash payment (rounded up to the nearest whole $0.01) equal to the product of: (i) the implied Aurora share price of $12.65; and (ii) the fraction of an Aurora Common Share otherwise issuable. For greater certainty, such cash payment will be considered to form part of the Consideration receivable by such Shareholder.
In addition, if the aggregate cash amount which a Shareholder is entitled to receive would otherwise include a fraction of $0.01, then the aggregate cash amount to which such Shareholder shall be entitled to receive shall be rounded up or down to the nearest whole $0.01.
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A4. A single Questionnaire may be used for the federal Joint Tax Election or the Qubec Joint Tax Election if one Co-Owner is chosen to submit the Joint Tax Election Information on behalf of all Co-Owners (the “Designated Co-Owner”). If a single Questionnaire is being used, you must respond “yes” to question 8(a) “Are you requesting a Joint Tax Election on behalf of all electing Co-Owners?” in Part I - Identification section of the Questionnaire.
The Designated Co-Owner must provide the required information for each electing Co-Owner in the Questionnaire. Aurora will prepare the Joint Tax Election(s) for each Co-Owner and send the forms to the Designated Co-Owner. Then the Designated Co-Owner must sign one completed copy of each Joint Tax Election and file the forms together with a list of all Co-Owners electing and proof of authority to sign on behalf of such Co-Owners with the CRA and RQ, as applicable.
Alternatively, each Co-Owner may complete their own Questionnaire. In this case, each Co-Owner should set out the Co-Owner’s respective ownership interest (i.e., percentage) in the CanniMed Common Shares held by all Co-Owners and report amounts on the Co-Owner Questionnaire corresponding to that ownership percentage.
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A5. If you are a registered shareholder (meaning that you either had a physical certificate or direct registration statement representing your CanniMed Common Shares), the Depositary may be able to provide you with this information. If you held your CanniMed Common Shares in an account with an investment dealer or broker, they may be able to confirm the number of CanniMed Common Shares you disposed of. Alternatively, this information should be on your brokerage statement for the period that includes the Take-Up Date.
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A6. To enable Former CanniMed Shareholders to submit their Joint Tax Election Information, Aurora has made the Questionnaire available to Former CanniMed Shareholders in a web-based format. This Tax Instruction Letter describes how to complete the Questionnaire. After receiving the completed Questionnaire, Aurora, CanniMed, the Depositary, or any of the appointed agents or representatives assisting with the tax election process and technology, will compile a Joint Tax Election form(s) based solely on the Joint Tax Election Information provided by the Former CanniMed Shareholder. Former CanniMed Shareholders may call the Technical Assistance Hotline for technical assistance regarding use of the Questionnaire. However, neither Aurora, CanniMed, nor the Joint Tax Election Website Agent will provide legal or tax advice to any Former CanniMed Shareholder in connection with their Joint Tax Election.
It is each Former CanniMed Shareholder’s responsibility to review the Joint Tax Election form for accuracy and completeness, sign it and file it with the CRA and, if applicable, RQ. Neither Aurora, CanniMed, the Depositary, nor any of the appointed agents or representatives assisting with the tax election process and technology will verify the accuracy of the Joint Tax Election Information provided by a Former CanniMed Shareholder.
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A7. No, you are not required to pay any fees to make the Joint Tax Election, provided the Joint Tax Election is filed by your filing deadline as described in Section 4 of this Tax Instruction Letter. The CRA and RQ, if applicable, may levy a penalty for a late filed Joint Tax Election.
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A8. The ACB of a Former CanniMed Shareholder’s CanniMed Common Shares that are capital property will generally be the amount that the Former CanniMed Shareholder paid for the CanniMed Common Shares when they were originally acquired plus reasonable costs to acquire the shares such as a broker commission. The cost of particular CanniMed Common Shares may be different due to certain events (e.g., where a shareholder received their CanniMed Common Shares in a tax-deferred transaction or by way of a gift). Special rules may apply if the Former CanniMed Shareholder received the CanniMed Common Shares as a distribution from CanniMed. The ACB of a Former CanniMed Shareholder’s CanniMed Common Shares acquired at any time will be determined by averaging the cost of such shares with the ACB of the CanniMed Common Shares held by the Former CanniMed Shareholders as capital property immediately before that time.
The rules for determining ACB are complex. You should consult your own tax advisor to obtain assistance.
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A9. Generally, if you received your CanniMed Common Shares from your spouse or common law partner through an inheritance or gift and the CanniMed Common Shares were held by you as capital property, the starting point for calculating the ACB of the CanniMed Common Shares will be the ACB of the CanniMed Common Shares to your spouse or common law partner immediately before their death or the gifting of the shares. However, the rules in this area are complex and you should consult your tax advisor for more information.
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A10. Aurora has agreed to make a Joint Tax Election with Former CanniMed Shareholders, subject to the limitations set out in subsection 85(1) and 85(2) of the Tax Act, only if complete Joint Tax Election Information is provided on or before the Joint Tax Election Information Submission Deadline. Therefore, it is important that you provide your complete information by that deadline. Aurora may, but is not obligated to, make a Joint Tax Election if the Joint Tax Election Information is received after the Joint Tax Election Information Submission Deadline. Consequently, you should ensure that CanniMed a complete and accurate Joint Tax Election Information is received by Aurora in accordance with the procedures set out above by the Joint Tax Election Information Submission Deadline. Accordingly, if you wish to make a Joint Tax Election with Aurora you should give your immediate attention to this matter.
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A11. Yes. You must report the disposition of CanniMed Common Shares even though you elected to obtain a full deferral of any capital gain that might otherwise arise on the disposition of your CanniMed Common Shares pursuant to the Offer. Your proceeds of disposition for Canadian income tax purposes will be equal to the Elected Amount set out in box B on page 3 of the federal Joint Tax Election (and equivalent box on a Qubec Joint Tax Election).
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A12. After receiving a properly completed Questionnaire, a Joint Tax Election will be compiled using the information that you provided. The Joint Tax Election(s) will be executed and Aurora will send an electronic copy to you using the email address provided in the Questionnaire.
You should then review the Joint Tax Election. If you do not agree with the content, calculations or any disclosures, contact the Technical Assistance Hotline indicated in the
Tax Instruction Letter. If you are satisfied, sign and file the Joint Tax Election(s) with the CRA and RQ, if applicable. Please also refer to section “Filing a Joint Tax Election with the Tax Authorities”.
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A13. In the event that the CanniMed Shares constitute taxable Canadian property and the disposition of such CanniMed Shares by a NonResident Holder gives rise to a capital gain which is not exempt from Canadian tax under the terms of an applicable income tax treaty or convention, the NonResident Holder will be an Eligible Holder and may, in general terms, require the Offeror to execute a Joint Tax Election generally as described above under “Holders Resident in Canada – Disposition of CanniMed Shares Pursuant to the Offer – Exchange of CanniMed Shares for Aurora Shares only or a Combination of Aurora Shares and Cash – Tax Election”.
Former CanniMed Shareholders that are non-residents of Canada should review the summary of the Canadian income tax consequences to non-residents of Canada in the Notice under the heading “Certain Canadian Federal Income Tax Considerations – Holders Not Resident in Canada”.
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A14. Yes, a Former CanniMed Shareholder making a Qubec Joint Tax Election must also make a federal Joint Tax Election. Note that a copy of the federal Joint Tax Election must be submitted to RQ when filing the Qubec Joint Tax Election. A Former CanniMed Shareholder that is a corporation established in Qubec is required to file the French version of the Qubec Joint Tax Election; however, the copy of the federal Joint Tax Election can be the English version.
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A15. If you no longer wish to make a Joint Tax Election following completion and submission of the Questionnaire to Aurora, do not file the Joint Tax Election sent to you by Aurora with the tax authorities in accordance with A.11 and promptly contact the Technical Assistance Hotline indicated in the
Tax Instruction Letter to notify Aurora of your decision to no longer make the Joint Tax Election.