Company: NXDT
Filing Date: 2025-01-21
Form Type: 424B3
Source: 0001437749-25-001494
Chunk: 137

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-01-21
Form: 424B3
Chunk 137
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as defined in the Tax Act) for a taxation year or a fiscal period and whose total “cost amount” of “specified foreign property” (as such terms are defined in the Tax Act), including the New NHT Shares and NXDT Common Shares, at any time in the year or fiscal period exceeds $100,000 will be required to file an information return with the CRA for the taxation year or fiscal period disclosing prescribed information. Subject to certain exceptions, a Resident Holder, other than a corporation or trust exempt from tax under Part I of the Tax Act, will be a “specified Canadian entity,” as will certain partnerships.

Penalties may apply where a Resident Holder fails to file the required information return in respect of such Resident Company Holder’s “specified foreign property” (as defined in the Tax Act) on a timely basis in accordance with the Tax Act. The reporting rules in the Tax Act are complex and this summary does not purport to address all circumstances in which reporting may be required by a Resident Company Holder.Resident Holders should consult their own tax advisors regarding the reporting rules contained in the Tax Act and compliance with these reporting requirements.

A Resident Holder may be subject to the “offshore investment fund property” rules in the Tax Act if they hold or have an interest in “offshore investment fund property”. In order for these rules to apply, the value of the interests in such property must reasonably be considered to be derived, directly or indirectly, primarily from portfolio investments in any non-resident entity. If applicable, these rules may result in an income inclusion, annually, based on the designated cost of the interest for this purpose multiplied by a prescribed interest rate plus two percent. These rules could apply in a fiscal period if it may reasonably be concluded, having regard to all the circumstances, that one of the main reasons for the Resident Holder acquiring, holding or having the interest in the offshore investment fund property was to benefit from the portfolio investments in such a manner that the taxes on the income, profits and gains therefrom for any particular year were significantly less than the tax that would have been applicable if such income, profits and gains had been earned directly by the Resident Holder. Resident Holders should consult their own tax advisors regarding the potential application of the offshore investment fund property rules to any New NHT Shares or NXDT Common Shares acquired by them pursuant to the Reorganization or the Company Merger.

The New NHT Shares will not be qualified investments under the Tax Act for trusts governed by a “registered retirement savings plan”, “registered retirement income