Company: SPPP
Filing Date: 2025-06-12
Form Type: F-10EF
Source: 0001999371-25-007710
Chunk: 27

Company: SPROTT PHYSICAL PLATINUM & PALLADIUM TRUST
Filing Date: 2025-06-12
Form: F-10EF
Chunk 27
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, there may be
an increase in the net income of the Trust for tax purposes and the taxable component of any amounts distributed to unitholders,
with the result that Canadian-resident unitholders could be reassessed by the CRA to increase their taxable income by the amount
of such increase, and non-resident unitholders potentially could be assessed directly by the CRA for Canadian withholding tax on
the amount of net gains on such transactions that were treated by the CRA as having been distributed to them. The CRA can assess
the Trust for a failure of the Trust to withhold tax on distributions made by it to non-resident unitholders that are subject to
withholding tax, and typically would do so rather than assessing the non-resident unitholders directly. Accordingly, any such re-determination
by the CRA may result in the Trust being liable for unremitted withholding taxes on prior distributions made to unitholders who
were not resident in Canada for the purposes of the Tax Act at the time of the distribution.

If the Trust experiences a “loss
restriction event” it could result in unintended tax consequences for unitholders.

The Tax Act contains loss restriction rules
that could result in unintended tax consequences for unitholders, including an unscheduled allocation of income or capital gains
that must be included in a unitholder’s income for Canadian income tax purposes. If the Trust experiences a “loss restriction
event”, it will: (i) be deemed to have a year-end for Canadian tax purposes whether or not the Trust has losses (which would
trigger an allocation of the Trust’s net income and net realized capital gains to unitholders to ensure that the Trust itself
is not subject to tax on such amounts); and (ii) the Trust will become subject to the Canadian loss restriction rules that generally
apply to corporations, including a deemed realization of any unrealized capital losses and disallowance of its ability to carry
forward capital losses. Generally, the Trust will be subject to a loss restriction event if a person becomes a “majority-interest
beneficiary”, or a group of persons becomes a “majority-interest group of beneficiaries”, of the Trust, as those
terms are defined in the affiliated persons rules contained in the Tax Act, with certain modifications. Generally, a majority-interest
beneficiary of a Trust is a beneficiary in the income or capital, as the case may be, of the Trust who, together with the beneficial
interests of persons and partnerships with whom the beneficiary is affiliated