Taxation - Distributions

Canadian Unitholders - Distribution Tax Information

The following information is being provided to assist Canadian Unitholders of Total Energy Services Trust ("Total" or the "Trust") in reporting distributions received from Total on their Canada Revenue Agency ("CRA") T1 General, "Canadian Individual Income Tax Return" ("T1"). This information is directed to individual Unitholders who, for the purposes of the Income Tax Act (Canada) are residents of Canada and hold Total Trust Units as capital property ("Canadian Unitholders"). The information being provided herein is intended to be general information only and is not intended to be legal or tax advice to any particular Canadian Unitholder or potential Canadian Unitholders. Canadian Unitholders or potential Canadian Unitholders are advised to consult with their respective legal and tax advisors concerning the tax treatment of distributions as it relates to their particular circumstances.

Trust Units held within a RRSP, RRIF, RESP, or DPSP

No amounts are required to be reported on Canadian Unitholders’ T1 for Trust Units held within a Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF), Registered Education Savings Plan (RESP) or a Deferred Profit Sharing Plan (DPSP).

Trust Units held outside a RRSP, RRIF, RESP, or DPSP

Canadian Unitholders who hold their Trust units outside of a RRSP, RRIF, RESP, or DPSP will receive a T3 Statement of Trust Income Allocations and Designations slip (“T3”) directly from Olympia Trust Company or from the investment broker or intermediary through which the Trust Units are held. Total is not able to provide the information contained on each Canadian Unitholder’s T3.

The amount reported in Box 26 “Other Income” on the T3 should be reported on the Canadian Unitholder’s T1 on line 130 “Other Income”.

Canadian Unitholders are required to reduce the adjusted cost base (“ACB”) of their Trust Units by the amount, if any, reported in Box 42 “Amount Resulting in Cost Base Adjustment” of the T3, which is equal to the cumulative distributions declared during the calendar year that the Canadian Unitholder was entitled to less the amount reported as “Other Income” in Box 26 of the T3. The ACB is then used to determine and report the capital gain/loss (if any) in the taxation year in which the Trust Units are disposed. If the ACB is reduced to zero, any further reductions in the ACB should be reported by the Canadian Unitholder as a capital gain.

United States Unitholders - Distribution Tax Information

The following information is being provided to assist United States of America (“U.S.”) individual Unitholders of Total (“U.S. Unitholders”) in reporting distributions received from Total on their Internal Revenue Services (“IRS”) Form 1040, “U.S. Individual Income Tax Form” (“Form 1040”). The information being provided herein is intended to be general information only and is not intended to be legal or tax advice particular to any particular U.S. Unitholder or potential U.S. Unitholders. U.S. Unitholders or potential U.S. Unitholders are advised to consult with their respective legal and tax advisors concerning the tax treatment as it relates to their particular circumstances.

Qualified Dividends

In consultation with its U.S. tax advisors, Total believes that its Trust Units should be classified as equity in a corporation, and that dividends paid to U.S. Unitholders should be “qualified dividends” for U.S. federal income tax purposes. As such, the portion of the distributions that are considered dividends for U.S. federal income tax purposes should qualify for the reduced rate of tax applicable to long-term capital gains.

Total has not received an IRS letter ruling nor a tax opinion from its U.S. tax advisors on this matter.

Trust Units Held Within a Qualified Retirement Plan

No amounts are required to be reported on Form 1040 for Trust Units held within a qualified retirement plan.

Trust Units Held Within a Qualified Retirement Plan

The portion of the distributions treated as “qualified dividends” should be reported on Line 9b of Form 1040, unless the fact situation of the U.S. Unitholders determines otherwise. Commentary in the Form 1040 Instruction Booklet with respect to “qualified dividends” provides examples of individual situations where the dividends would not be “qualified dividends”. Where, due to individual situations, the dividends are not “qualified dividends”, the amount should be reported on Schedule B – Part II – Ordinary Dividends and Line 9a of Form 1040.

For U.S. federal income tax purposes, in reporting a return of capital with respect to distributions received, U.S. Unitholders are required to reduce the cost base of their Trust Units by the total amount of distributions received that represent a return of capital. This amount is non-taxable if it is a return of cost base in the Trust Units. A return of capital for U.S. income tax purposes is calculated differently than for Canadian income tax purposes. For U.S. income tax purposes, a return of capital occurs only after all the current and accumulated earnings and profits of a corporation have been distributed. If the full amount of the cost base has been recovered, any further distribution deemed a return of capital should be reported as a capital gain.

U.S. Unitholders are encouraged to utilize the Qualified Dividends and Capital Gain Tax Worksheet of Form 1040 to determine the amount of tax that may be otherwise applicable.

The taxable portion of the distributions is subject to a minimum 15 percent Canadian withholding tax that is withheld prior to any payments being distributed to Unitholders who are non-residents of Canada. For Trust Units held outside a qualified retirement account, the full amount of all withholding tax should be creditable, subject to numerous limitations, for U.S. income tax purposes in the year in which the withholding tax is withheld. Where Trust Units are held in qualified retirement account, the same withholding tax applies but the amount is not creditable for U.S. income tax purposes.

The amount of Canadian withholding tax withheld should be reported on Form 1116, "Foreign Tax Credit (Individual, Estate, or Trust)". Information regarding the amount of Canadian withholding tax withheld should be determined from your own records as Total is not able to provide this information. Amounts over withheld by Canada Revenue Agency, if any, should be claimed as a refund no later than two years after the calendar year in which the payment was paid.

U.S. Unitholders should report their dividend income and capital gain (if any), and make adjustments to the tax basis of their Trust Units in accordance with this information and subject to advice from their legal and tax advisors. U.S. Unitholders who hold their Trust Units through an investment broker or other intermediary should receive tax reporting information from their investment broker or other intermediary. We expect that the investment broker or other intermediary will issue a Form 1099-DIV, "Dividends and Distributions" or a substitute form developed by the investment broker or other intermediary. The Trust is not required to furnish such Unitholders with Form 1099-DIV. Information on the Form 1099-DIV issued by the investment broker or other intermediary may not accurately reflect the information in this press release for a variety of reasons. U.S. Unitholders should consult their investment broker, legal and tax advisors to ensure that the information presented here is accurately reflected on their tax returns. Investment brokers and/or intermediaries may not be required to issue an amended Form 1099-DIV.