Tax Deferral

NorthWest Healthcare Properties REIT pays a monthly distribution to its unitholders of which only a portion is taxable.

In 2016, the REIT paid monthly distributions of $0.06667 per Unit and 100% of the distributions were tax deferred, by reason of the REIT’s ability to claim capital costs allowance. The adjusted cost base of the Units held by the Unitholder will generally be reduced by the non-taxable portion of the distribution.

2016 REIT Tax Treatment

In 2015, the REIT paid monthly distributions of $0.06667 per Unit and 100% of the distributions were tax deferred, by reason of the REIT’s ability to claim capital costs allowance. The adjusted cost base of the Units held by the Unitholder will generally be reduced by the non-taxable portion of the distribution.

On May 15, 2015, the REIT completed the plan of arrangement under the Business Corporations Act (Alberta) pursuant to which the REIT and NorthWest International Healthcare Properties REIT (“NWI”) combined (the "Combination Transaction”). The unitholders of NWI received 0.208 of a REIT Unit for each NWI unit held, on a tax-deferred basis.

Prior to the Combination Transaction NWI paid monthly distributions of $0.01833 per NWI unit and 100% of the distributions paid to NWI unitholders for this period were tax deferred, by reason of the NWI’s ability to claim capital costs allowance. The adjusted cost base of the NWI units held by the NWI unitholder will generally be reduced by the non-taxable portion of the distribution. For periods subsequent to the Combination Transaction NWI unitholders became REIT Unitholders and received $0.06667 per Unit and 100% of the distributions were tax deferred, by reason of the REIT’s ability to claim capital costs allowance.

2015 REIT Tax Treatment

2015 NWI Tax Treatment – January 1 to May 15

In 2014, 100% of the distributions were tax deferred, by reason of the REIT’s ability to claim capital costs allowance. The adjusted cost base of the Units by the Unitholder will generally be reduced by the non-taxable portion of the distribution.

2014 Tax Treatment

In 2013, 100% of the distributions were tax deferred, by reason of the REIT’s ability to claim capital costs allowance. The adjusted cost base of the Units by the Unitholder will generally be reduced by the non-taxable portion of the distribution.

2013 Tax Treatment

In 2012, 94.85% of the distributions were tax deferred, by reason of the REIT’s ability to claim capital cost allowance. The adjusted cost base of the Units held by the Unitholder will generally be reduced by the non-taxable portion of the distribution.

2012 Tax Treatment

In 2011, 94.13% of the distributions were tax deferred, by reason of the REIT’s ability to claim capital cost allowance. The adjusted cost base of the Units held by the Unitholder will generally be reduced by the non-taxable portion of the distribution.

2011 Tax Treatment

In 2010, 100% of the distributions were tax deferred, by reason of the REIT’s ability to claim capital cost allowance. The adjusted cost base of the Units held by the Unitholder will generally be reduced by the non-taxable portion of the distribution.

2010 Tax Treatment

Non-Resident Withholding Tax
Registered non-resident unitholders are subject to withholding tax on 100% of the distribution at the following rates:
2010

US        15%

Other    18.5%

Non-registered unitholders who hold their units through a financial institution may be subject to a higher withholding tax deduction. However, they are eligible to receive a refund once the breakdown of the distribution payment is known.

In addition, for non-residents participating in the distribution reinvestment plan, non-resident withholding tax is deducted from the non-residents’ distributions prior to determining the reinvestment amount and the 3% bonus.

Distributions
A holder of NorthWest Healthcare Properties REIT is generally required to include the taxable income received from the REIT in his or her income tax return. The taxable portion of the distribution has to be included even if the distribution is reinvested under the Distribution Reinvestment Plan.

Canadian unitholders will receive a Statement of Trust Income Allocations and Designations (T3) for income tax purposes. You should receive a statement either from your financial institution or stockbroker if you hold your units in an account or directly from NorthWest Healthcare Properties REIT’s transfer agent, Computershare Trust Company of Canada, if you are a registered unitholder and are in possession of a unit certificate.

Non-resident unitholders should receive a Statement of Amounts Paid or Credited to Non-Residents of Canada (NR4) with the taxable income reported in box 16 and the non-resident tax withheld shown in box 17.

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