The Board reviews and determines the dividend on a quarterly basis after considering expected commodity prices, foreign exchange rates, economic conditions, production volumes, tax payable, and our capacity to finance operating and investing obligations. The dividend rate is established with the intent of mitigating short-term market volatility over several months. It also recognizes our intention to fund capital expenditures primarily through funds generated from operations and to maintain a strong balance sheet to take advantage of acquisition opportunities.
Record dates for regular monthly dividends are the end of each month, and payment dates are approximately the 15th day of the following month.
The regular monthly dividend is currently fixed at $0.015 per share.
A Direct Deposit option is in place to provide shareholders who have Canadian bank accounts with a method of receiving cash dividends as a direct deposit into their bank account.
U.S. Currency Payment Plan
Shareholders may elect to receive their dividend payments in U.S. funds.
DIVIDEND REINVESTMENT PLAN (DRIP)
As announced on August 4, 2016, Freehold has suspended its Dividend Reinvestment Plan (DRIP) until further notice.
CANADIAN INCOME TAX
Dividends paid on common shares are designated as eligible dividends for Canadian income tax purposes. If you have any questions regarding the taxation of eligible dividends, please contact your Canadian tax advisor or your local office of the Canada Revenue Agency.
There was no return of capital portion with respect to our dividends for Canadian tax purposes in 2019. Taxation information is available from your broker or other intermediary.
Shareholders who are not residents of Canada for income tax purposes are encouraged to seek advice from a qualified tax advisor in their country of residence regarding the tax treatment of dividends.
NON-RESIDENT WITHHOLDING TAX
Dividends paid or payable to non-residents of Canada are subject, on the date of payment, to a withholding tax of 25%, as prescribed by the Income Tax Act (Canada). This withholding tax may be reduced in accordance with reciprocal tax treaties. In the cast of the Tax Treaty between Canada and the U.S., the withholding tax for U.S. residents is prescribed at 15%.
The majority of Freehold's revenue is derived from non-operated royalty interests. Based on the nature of our assets, our dividends are not "qualified dividends" for U.S. tax purposes.
In consultation with its U.S. tax advisors, Freehold believes that it should be classified as a passive foreign investment company ("PFIC") under U.S. federal income tax principles. As such, dividends are subject to the provisions of U.S. federal income taxation applicable to PFICs.