IMPORTANT TAX NOTICE TO U.S. SHAREHOLDERS RELATED TO YOUR INVESTMENT IN FRANCO-NEVADA CORPORATION
This information is provided for shareholders who are U.S. taxpayers. It may not be relevant for other persons.
THE U.S. TAX RULES REGARDING PFICS ARE VERY COMPLEX AND INVESTORS ARE STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISOR REGARDING THE U.S. TAX CONSEQUENCES OF THE PFIC RULES TO YOUR INVESTMENT IN FRANCO-NEVADA CORPORATION.
PFIC Status for Tax Year 2015
Each of Franco-Nevada Corporation (“FNC”) and its non-U.S. subsidiaries, Franco-Nevada Australia Pty Ltd., Franco-Nevada Mexico Corporation, S.A. de C.V., Franco-Nevada Canada Holdings Corp., FN Subco Inc., Franco-Nevada GLW Holdings Corp., Franco-Nevada (Barbados) Corporation, Franco-Nevada LRC Holdings Corp., Minera Global Copper Chile S.A. (FNC and each such non-US subsidiary, an “FNC Entity”) believes, on a more-likely-than-not basis, that it was not a passive foreign investment company (“PFIC”) within the meaning of Section 1297 of the Internal Revenue Code of 1986, as amended, for its tax year ended December 31, 2015 (“2015 Tax Year”).
The determination as to whether any corporation was, or will be, a PFIC for a particular year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations and uncertainty. In addition, whether any corporation will be a PFIC for any tax year depends on its assets and income over the course of such tax year, and, as a result, the PFIC status of FNC and any of the FNC Entities for 2015 and any future tax year cannot be predicated with certainty.
INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISOR REGARDING THE PFIC STATUS OF THE FNC ENTITIES.
The attached PFIC Annual Information Statements are being provided pursuant to the requirements of Treasury Regulation Section 1.1295-1(g)(1). These PFIC Annual Information Statements contain information to enable you, should you so decide after consultation with your tax advisor, to take the position that one or more of the FNC Entities is a PFIC for tax year 2015 and/or choose to elect to treat one or more of the FNC Entities as a qualified electing fund (“QEF”).
The QEF election is generally made on IRS Form 8621 (“Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund”) on or before the due date, including extensions, for the income tax return with respect to the tax year to which the election relates.
Under current U.S. law, a U.S. person who is a PFIC shareholder at any time during the year is required to file Form 8621. In addition, a U.S. person who owns PFIC stock through another U.S. person also is required to file Form 8621 in certain circumstances. Moreover, certain categories of U.S. shareholders must file information returns on IRS Form 8938 with respect to their investment in certain specified foreign financial assets if their total investments in such assets exceed $50,000. FNC stock may be treated as specified foreign financial assets for this purpose. Investors should consult their own tax advisers as to the possible application to them of this filing requirement.
During the 2015 Tax Year, FNC held a share interest of less than 10 percent in several non-U.S. companies (the “Portfolio Investment Companies”). FNC will not be providing PFIC Annual Information Statements with respect to each of these investments because sufficient information is not available to ascertain whether these entities are in fact PFICs. FNC believes that the total amount of ordinary earnings for each FNC share for these Portfolio Investment Companies that have declared themselves PFICs would not exceed $0.001 for the 2015 Tax Year.