IMPORTANT TAX NOTICE
Special U.S. Federal Income Tax Election is Available Regarding
Your Investment in CanAlaska Uranium Ltd.
Shareholders who are U.S. taxpayers should be aware that CanAlaska Uranium Ltd. (“CanAlaska”) believes that it was a passive foreign investment company (“PFIC”) in its fiscal year ended April 30, 2010 and based on current business plans and financial projections, expects to be a PFIC for its current fiscal year ending April 30, 2011, and expects that it may also be a PFIC in subsequent years.
The attached PFIC Annual Information Statement is being provided to you pursuant to Treasury Regulations Section 1.1295-1(g)(1). This PFIC Annual Information Statement contains information to enable you, should you choose, to elect to treat CanAlaska as qualified electing fund (“QEF”). A U.S. shareholder does not have to make this election for shares held in his or her retirement account.
A U.S. 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 of CanAlaska, whether or not CanAlaska distributes any amounts to its shareholders.
CanAlaska did not have ordinary earnings or net capital gains for its taxable year ended April 30, 2010 and based on current business plans and financial projections, believes that it will not have ordinary earnings or net capital gains in any future years in which it may be a PFIC.
If you do not elect to treat CanAlaska as a QEF, then if CanAlaska is a PFIC for any year during your holding period, you would be subject to the PFIC rules, which could result in adverse tax consequences to you. For example, if you were to receive a so-called “excess distribution” or if you sell your CanAlaska stock in the future at a gain, you could be required to allocate such distribution or gain, as the case may be, ratably over the time period during which you held your stock while CanAlaska was a PFIC, and pay tax at the highest rate (rather than, if otherwise applicable, the long-term capital gain rate) on ordinary income in effect for each year to which the gain is allocated plus interest on the tax.
The QEF election is made by completing and attaching Form 8621 to a U.S. federal income tax return filed by the due date of the return, as extended.
We strongly urge you to consult your own tax advisor for advice concerning the application of the U.S. federal income tax rules governing PFICs and whether it is advisable for you to make a QEF election or other election under the PFIC rules.
The instructions for Form 8621 can be found on the Internet at http://www.irs.gov/pub/irs-pdf/i8621.pdf
PFIC Annual Information Statement
- This Information Statement applies to the taxable year of CanAlaska Uranium Ltd. (the “Company”) beginning on May 1, 2009 and ending on April 30, 2010.
- Each shareholder of the Company has the following pro-rata per share of the ordinary earnings and net capital gain of the Company for the taxable year of the Company specified in paragraph (1):Ordinary Earnings: NONE
Net Capital Gain: NONE
- The amount of cash and fair market value of other property distributed or deemed distributed by the Company to each shareholder of the Company during the taxable year specified in paragraph (1) is as follows:Cash: NONE
Fair Market Value of Property: NONE
- The Company will permit its shareholders to inspect and copy the Company’s permanent books of account, records, and such other documents as may be maintained by the Company that are necessary to establish that the Company’s ordinary earnings and net capital gain, as provided in section 1293(e) of the Internal Revenue Code, are computed in accordance with U.S. income tax principles.
Chief Executive Officer