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Tax FAQs - Capital Reduction and Return of Capital

Capital Reduction and Return of Capital

Tax FAQs

What is the Capital Reduction and Return of Capital?

The Capital Reduction is a proposed reduction in the capital in respect of the Barrick shares by an aggregate amount equal to $750 million. Approval of the Capital Reduction enables Barrick to distribute the same amount to shareholders as a Return of Capital. The Return of Capital is expected to be carried out through three proposed equal distributions to shareholders as described in greater detail in the 2021 Information Circular for Barrick.

THIS DOCUMENT IS PROVIDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONTAIN A COMPLETE ANALYSIS OR DESCRIPTION OF ALL POTENTIAL CANADIAN, U.S. OR U.K. FEDERAL, PROVINCIAL, STATE, LOCAL, AND OTHER INCOME TAX CONSEQUENCES. THIS DOCUMENT ASSUMES, AMONGST OTHER THINGS DESCRIBED IN “THE CERTAIN FEDERAL INCOME TAX CONSIDERATIONS IN THE 2021 INFORMATION CIRCULAR FOR BARRICK”, THAT THE SHARES ARE HELD ON CAPITAL ACCOUNT. EACH SHAREHOLDER IS STRONGLY URGED TO CONSULT WITH AND RELY UPON ITS OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH SHAREHOLDER RELATED TO THE RETURN OF CAPITAL.

SHAREHOLDERS ARE STRONGLY ADVISED TO REVIEW THE “CERTAIN FEDERAL INCOME TAX CONSIDERATIONS” IN THE 2021 INFORMATION CIRCULAR FOR BARRICK.

Barrick is not able to provide tax advice to a particular holder and all shareholders should consult their own tax advisors.

Canadian Federal Tax Considerations – Non-Resident Shareholders

Will Barrick deduct any Canadian withholding tax on the Return of Capital?

No. Barrick will not deduct any withholding taxes on the Return of Capital payment to any shareholder.

Canadian Federal Tax Considerations – Resident Shareholders

What are the Canadian tax consequences of a Return of Capital to a Canadian resident shareholder?

The Return of Capital is not expected to have immediate Canadian federal income tax consequences for Canadian shareholders, but Canadian shareholders will reduce the adjusted cost base of their shares by the amount of the Return of Capital they receive. To the extent the adjusted cost base is reduced below zero, the excess portion is treated as a capital gain. Shareholders should consult their own tax advisors as to their specific tax consequences.

See “Certain Federal Income Tax Considerations – Certain Canadian Federal Income Tax Considerations” in the 2021 Information Circular for Barrick.

Will Barrick calculate the adjusted cost base having regards to the Return of Capital?

No, if adjusted cost base information is not maintained by the shareholders’ broker, the shareholder will need to track their reduction in the adjusted cost base of the shares. Any shareholders should consult their own tax advisors regarding the calculation of their adjusted cost base.

Will the Return of Capital be reported on a Canadian tax form?

The Return of Capital is not reported on any Canadian tax forms distributed to you or the Canada Revenue Agency in respect of your shares.

Do I need to report anything on my Canadian tax return with respect to the Return of Capital?

Provided a shareholder does not realize a capital gain as described above, shareholders generally will not be required to report anything in respect of the receipt of the Return of Capital on their Canadian tax return.

Has the Canada Revenue Agency provided an advanced tax ruling with respect to the Return of Capital?

No, Barrick has not received an advanced tax ruling with respect to the Return of Capital.

United States Federal Income Tax Considerations

What is the U.S. federal tax treatment of the Return of Capital?

The Return of Capital payments will likely be treated as dividends for United States federal income tax purposes for shareholders who are U.S. taxpayers. See “Certain Federal Income Tax Considerations – Certain United States Federal Income Tax Considerations” in the 2021 Information Circular for Barrick.

Will the Return of Capital be reported on a U.S. tax form?

The Return of Capital will be included on form 1099-DIV and this amount should be reported as a dividend in the Shareholders’ U.S. federal income tax return.

Will a U.S. Shareholder be entitled to a foreign tax credit with respect to the Return of Capital?

As no Canadian tax is expected to be payable on the Return of Capital for foreign tax credit purposes, the foreign tax credit rules should not be relevant in the circumstances.

Has the IRS provided an advanced tax ruling with respect to the Return of Capital?

No, Barrick has not received an advanced tax ruling with respect to the Return of Capital.

United Kingdom Income Tax Considerations

What is the UK tax treatment of the Return of Capital?

The Return of Capital is expected to be treated as a part disposal of the investors shareholding, subject to the small disposal rules, which will result in a capital gain and is subject to tax. See “Certain Federal Income Tax Considerations – Certain United Kingdom Federal Income Tax Considerations” in the 2021 Information Circular for Barrick.

Will the Return of Capital be reported on a UK tax form?

The Return of Capital is not reported on any UK tax forms distributed to you or the HMRC in respect of your shares.

Will a UK Shareholder be entitled to a foreign tax credit with respect to the Return of Capital?

As no Canadian tax is expected to be payable on the Return of Capital for foreign tax credit purposes, the foreign tax credit rules should not be relevant in the circumstances.

Has the HMRC provided an advanced tax ruling with respect to the Return of Capital?

No, Barrick has not received an advanced tax ruling with respect to the Return of Capital.