Important Links

News Releases

Press Release Navigation
<<< Previous Headlines Next >>>
Harvest Energy Trust Announces Tax Information

Mar 19, 2004 - 13:08 ET

CALGARY, ALBERTA--(CCNMatthews - Mar 19, 2004) - (TSX: HTE.UN) - 
Harvest Energy Trust (the "Trust" or "Harvest") announces the tax 
on distributions declared and paid. The Trust paid $2.40 Canadian 
per Trust Unit in distributions in 2003. The distribution 
declared in December 2002 and paid in January 2003 was deemed to 
be 100% return of capital. For the distributions declared in 2003 
and paid in the months of February 2003 through to January 2004, 
41% of the distributions are taxable and 59% are a return of 

The table below sets out the distributions declared since 
inception of the Trust to December 31, 2003 and also indicates 
the income and return of capital allocation for each 


Canadian $'s
                                           Distribution Taxability
                                                         Per Trust Unit
                             Payment                    ----------------
               Payment     per Trust         Return of
Record Date     Date            Unit  Income   Capital   Income  Capital
December 31,   January 15,
 2002           2003           $0.20       0%      100%  $0.000   $0.200
January 31,    February 17,
 2003           2003           $0.20      41%       59%  $0.082   $0.118
February 28,   March 17,
 2003           2003           $0.20      41%       59%  $0.082   $0.118
March 31,      April 15,
 2003           2003           $0.20      41%       59%  $0.082   $0.118
April 30,      May 15,
 2003           2003           $0.20      41%       59%  $0.082   $0.118
May 30,        June 16,
 2003           2003           $0.20      41%       59%  $0.082   $0.118
June 30,       July 15,
 2003           2003           $0.20      41%       59%  $0.082   $0.118
July 31,       August 15,
 2003           2003           $0.20      41%       59%  $0.082   $0.118
August 29,     September 15,
 2003           2003           $0.20      41%       59%  $0.082   $0.118
September 30,  October 15,
 2003           2003           $0.20      41%       59%  $0.082   $0.118
October 31,    November 14,
 2003           2003           $0.20      41%       59%  $0.082   $0.118
November 28,   December 15,
 2003           2003           $0.20      41%       59%  $0.082   $0.118
December 16,   January 15,
 2003           2004           $0.20      41%       59%  $0.082   $0.118


Canadian Unitholders 

Unitholders holding their Harvest Energy Trust units in a 
Registered Retirement Savings Plan, Registered Retirement Income 
Fund or Deferred Profit Savings Plan should not report any income 
related to distributions on their income tax return. Unitholders 
holding their units outside such plans will receive a T3 
Supplementary Information Slip ("T3"), postmarked on or before 
March 30, 2004. Harvest's registered Unitholders will receive a 
T3 from Harvest's transfer agent, Valiant Trust Company 
("Valiant"). Unitholders that hold their units through a broker 
or other intermediary will receive a T3 directly from their 
broker or intermediary. Unitholders are to report the taxable 
portion of distributions as "other income" on their 2003 income 
tax return. 

Canadian Unitholders are required to reduce the adjusted cost 
base ("ACB") of their trust units by an amount equal to the 
return of capital portion of the distributions. The ACB is used 
to calculate capital gains or losses on the disposition of trust 

Harvest encourages all Unitholders to seek independent competent 
legal or tax advice in respect of their specific circumstances. 

U.S. and Non-resident Unitholders 

The following information is provided for general information 
only. As such, Harvest recommends that all U.S. and Non-resident 
Unitholders obtain independent legal or tax advice as to their 
particular consequences of holding Harvest Trust Units. Given 
that the largest component of Non-resident Unitholders are U.S. 
persons, the following discussion is intended to provide general 
guidance for U.S. Unitholders. 

Harvest is considered a "corporation" for U.S. federal income tax 
purposes. This means that the distributions paid to U.S. 
Unitholders, where the Harvest Trust Units are held outside of a 
qualified retirement plan, will be treated as dividends. U.S. 
individuals will report the amount of such dividends on Internal 
Revenue Service ("IRS") Form 1040 "U.S. Individual Tax Return" 
("Form 1040"). These dividends may be eligible for the recently 
implemented low rate of tax on "qualified dividends". 
Distributions paid by Harvest where the Trust Units are held by a 
qualified retirement plan are not required to be reported on the 
Form 1040. 

Registered Unitholders will receive a T3 slip directly from 
Harvest's transfer agent, Valiant, that indicates the 2003 
distributions denominated in Canadian dollars. Unitholders that 
hold their investment in Harvest through a broker or other 
intermediary will likely receive an IRS Form 1099-DIV "Dividends 
and Distributions" ("Form 1099-DIV") that contains information in 
respect of the 2003 distributions. Unitholders are encouraged to 
review the Form 1099-DIV carefully as it may contain incorrect 

The U.S. tax rules state that no portion of the distribution will 
be considered a tax deferred return of capital unless Harvest 
computes its current and accumulated earnings and profits in 
accordance with U.S. income tax principles. U.S. Unitholders 
should note that Harvest has not prepared a current and 
accumulated earnings and profits calculation. Accordingly, the 
Harvest distributions are 100% taxable as a dividend to U.S. 

Generally, the portion of the distributions paid by Harvest to a 
Non-Resident is subject to Canadian withholding tax under the 
Income Tax Act - Canada at a rate of 25%. For a Non-Resident 
Unitholder who is a resident of the United States, the 
withholding tax rate is generally reduced to 15%, as per the 
Canada-United States Income Tax Convention. The amount of 
Canadian withholding tax deducted from the cash distributions may 
be reported by U.S. individual Unitholders on IRS Form 1116 
"Foreign Tax Credit" to offset a portion of the U.S. tax 
liability as a result of the distributions; alternatively U.S. 
Unitholders may elect to deduct the Canadian withholding tax in 
the determination of taxable income. 

An NR4 tax slip ("Statement of Amounts Paid or Credited to 
Non-residents of Canada") indicating the amount of Canadian 
withholding tax deducted (in Canadian dollars) will be issued to 
U.S. and Non-resident Unitholders. Registered Unitholders will 
receive an NR4 directly from Valiant. In respect of Unitholders 
that hold their units through a broker or other intermediary, the 
broker or intermediary will receive the NR4. In respect of 
Unitholders that hold their investment through a broker or other 
intermediary the Unitholder is likely to only receive a Form 
1099-DIV (see above) that reflects the Canadian withholding tax 
deducted. Similar to above the Unitholder should review the Form 
1099-DIV carefully as it may be incorrect. Unitholders should 
note that Harvest does not nor is it obligated to prepare the 
Form 1099-DIV documents. 

U.S. resident Unitholders may attempt to recover (i.e. receive a 
refund from the Canadian Revenue Agency) the amount of Canadian 
withholding tax deducted that relates to the return of capital 
portion of the distribution paid (see table above). Unitholders 
that wish to do this will be required to file an NR7-R 
"Application for Refund of Non-resident Tax Withheld" form with 
the Canadian Revenue Agency. 

The information above is not exhaustive of all possible U.S. 
income tax considerations nor is it intended to provide legal or 
tax advice to any particular holder or potential holder of 
Harvest Trust Units. Holders or potential holders of Harvest 
Trust Units should consult their own competent legal and tax 
advisors as to their particular tax consequences of holding 
Harvest Trust Units and the most beneficial way of reporting the 
distributions received and Canadian withholding tax paid to the 
appropriate taxation authorities located in the various 

The securities of Harvest have not been registered under the U.S. 
Securities Act of 1933, as amended, and may not be offered or 
sold in the United States absent registration or applicable 
exemption from the registration requirements. This news release 
shall not constitute an offer to sell or the solicitation of an 
offer to buy securities in any jurisdiction. 

Harvest's trust units trade on the Toronto Stock Exchange under 
the symbol HTE.UN. 

This press release is not for release or distribution in the 
United States. 


Harvest Energy Trust
1900, 330 - 5th Avenue S.W.
Calgary, AB T2P 0L4


ADVISORY: Certain information regarding Harvest Energy Trust and 
Harvest Operations Corp. including management's assessment of 
future plans and operations, may constitute forward-looking 
statements under applicable securities law and necessarily 
involve risks associated with oil and natural gas exploration, 
production, marketing and transportation such as loss of market, 
volatility of prices, currency fluctuations, imprecision of 
reserve estimates, environmental risks, competition from other 
producers and ability to access sufficient capital from internal 
and external sources. As a consequence, actual results may differ 
materially from those anticipated in the forward-looking 



 Harvest Energy Trust
Jacob Roorda
(403) 265-1178


Harvest Energy Trust
David M. Fisher
Vice President, Finance
(403) 265-1178
(403) 265-3490 (FAX)