FORM 20-F/A Brookfield Property Partners L.P. - Brookfield Asset ...

Canadian Limited Partner and will be subject to the normal rules in the Tax Act applicable to such dividends,including the enhanced dividend gross-up and tax credit for “eligible dividends” as defined in the Tax Act whenthe dividend received by the Property Partnership is designated as an “eligible dividend”.Foreign taxes paid by our company or the Property Partnership and taxes withheld at source (other thanfor the account of a particular unitholder) will be allocated pursuant to the governing partnership agreement.Each Canadian Limited Partner’s share of the “business-income tax” and “non-business-income tax” paid in aforeign country for a year will be creditable against its Canadian federal income tax liability to the extentpermitted by the detailed rules contained in the Tax Act. Although the foreign tax credit provisions are designedto avoid double taxation, the maximum credit is limited. Because of this, and because of timing differences inrecognition of expenses and income and other factors, there is a risk of double taxation. The Minister announcedthe Foreign Tax Credit Generator Proposals on March 4, 2010 which are contained in draft legislation releasedon August 27, 2010, to address certain foreign tax credit generator transactions. Under the Foreign Tax CreditGenerator Proposals, the foreign “business income tax” or “non-business-income tax” for any taxation year maybe limited in certain circumstances, including where a Canadian Limited Partner’s share of our company’sincome under the income tax laws of any country (other than Canada) under whose laws the income of ourcompany is subject to income taxation, is less than the Canadian Limited Partner’s share of such income forpurposes of the Tax Act. No assurances can be given that the Foreign Tax Credit Generator Proposals will notapply to any Canadian Limited Partner. If the Foreign Tax Credit Generator Proposals apply, a Canadian LimitedPartner’s foreign tax credits will be limited.Our company and the Property Partnership will be deemed to be a non-resident person in respect ofcertain amounts paid or credited to them by a person resident or deemed to be resident in Canada, includingdividends or interest. Dividends or interest (other than interest exempt from Canadian federal withholding tax)paid by a person resident or deemed to be resident in Canada to the Property Partnership will be subject towithholding tax under Part XIII of the Tax Act at the rate of 25%. However, CRA’s administrative practice insimilar circumstances is to permit the rate of Canadian federal withholding tax applicable to such payments to becomputed by looking through the partnership and taking into account the residency of the partners (includingpartners who are resident in Canada) and any reduced rates of Canadian federal withholding tax that anynon-resident partners may be entitled to under an applicable income tax treaty or convention, provided that theresidency status and entitlement to the treaty benefits can be established. In determining the rate of Canadianfederal withholding tax applicable to amounts paid by the Holding Entities to the Property Partnership, the BPYGeneral Partner and the Property General Partner expect that the Holding Entities to look-through the PropertyPartnership and our company to the residency of the partners of our company (including partners who areresidents of Canada) and to take into account any reduced rates of Canadian federal withholding tax thatnon-resident partners may be entitled to under an applicable income tax treaty or convention in order todetermine the appropriate amount of Canadian federal withholding tax to withhold from dividends or interestpaid to the Property Partnership. However, there can be no assurance that CRA would apply its administrativepractice in this context. Under the Treaty, a Canadian resident payer is required in certain circumstances to lookthroughfiscally transparent partnerships, such as our company and the Property Partnership, to the residency andtreaty entitlements of their partners and take into account reduced rates of Canadian federal withholding tax thatsuch partners may be entitled to under the Treaty.If our company incurs losses for tax purposes, each Canadian Limited Partner will, subject to the REOPProposals discussed below, be entitled to deduct in the computation of income for tax purposes the CanadianLimited Partner’s pro rata share of any net losses for tax purposes of our company for its fiscal year to the extentthat the Canadian Limited Partner’s investment is “at-risk” within the meaning of the Tax Act. The Tax Actcontains “at-risk rules” which may, in certain circumstances, restrict the deduction of a limited partner’s share ofany losses of a limited partnership. The BPY General Partner and the Property General Partner do not anticipatethat our company or the Property Partnership will incur losses but no assurance can be given in this regard.Accordingly, Canadian Limited Partners should consult their own tax advisors for specific advice with respect tothe potential application of the “at-risk rules”.181