This statement is provided for shareholders of Gabriel who are United States persons for purposes of the US Internal Revenue Code. It is not relevant to other shareholders.
As Gabriel is a Canadian corporation and more than 75% of its gross income is classified as passive income, it meets the Internal Revenue Code definition of a passive foreign investment company ("PFIC") for the taxable year ended December 31, 2010. Certain US income tax consequences flow from this designation and these consequences may be mitigated by electing to treat Gabriel as a Qualified Electing Fund ("QEF").
The attached PFIC Annual Information Statement is being provided to you pursuant to the requirements of Treasury Regulation Section 1.1295-1(g)(1). The PFIC Annual Information Statement contains information to enable you or your tax advisor to prepare your tax return if you elect to treat Gabriel as a QEF.
A US shareholder who makes a QEF election is required to annually include in his or her income his or her pro rata share of the ordinary earnings and net capital gains for Gabriel. The QEF election is made by completing and attaching Form 8621 to your federal income tax return filed by the due date of the return, as extended.
WE STRONGLY URGE U.S. SHAREHOLDERS TO CONSULT WITH THEIR OWN TAX ADVISORS REGARDING ANY DECISION TO MAKE (OR REFAIN FROM MAKING) ANY ELECTION THAT MAY BE AVAILABLE TO THEM BECAUSE ANY SUCH DECISION WILL DEPEND UPON THEIR OWN PARTICULAR TAX SITUATION AND MAY HAVE SIGNIFICANT AND CONTINUING US TAX CONSEQUENCES. GABRIEL IS UNABLE TO GIVE ADVICE IN THIS REGARD.
Further information on PFIC rules is available on the internet at the Internal Revenue Service website.
Detailed information about PFICs and the QEF election: http://www.irs.gov/instructions/i8621/ch01.html
Instructions for completing IRS Form 8621: http://www.irs.gov/pub/irs-pdf/i8621/ch01.pdf
Form 8621: http://www.irs.gov/pub/irs-pdf/f8621.pdf
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