ParkLane Financial Group Ltd Lakeshore Road, Suite 205 South Burlington, ON L7S 2J1 Tel: ; Toll Free:

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1 ParkLane Financial Group Ltd Lakeshore Road, Suite 205 South Burlington, ON L7S 2J1 Tel: ; Toll Free: June 3, 2014 Subject: Donations for Canada Program (the Gift Program ) Dear Donor: We are writing to advise you of a significant development regarding the Gift Program. As we have advised you in earlier updates Mr. Marsh is one of the Donors in the Gift Program. Mr. Marsh filed an appeal of the re-assessment of his income tax return by the Canada Revenue Agency (the CRA ) in which the CRA disallowed the deductions he claimed based on the charitable tax receipts he filed relating to the Gift Program. Mr. Marsh has settled his appeal with the CRA. Pursuant to that settlement the CRA is offering to settle all valid Notices of Objections filed by Donors relating to their participation in the Gift Program by allowing the cash contributions made by each of those Donors as valid gifts for income tax purposes. The tax credits claimed by Donors for the donations of their sub-trust units will not be allowed by the CRA, but interest relief will be available on certain terms relating to the disallowed sub-trust unit donations. The CRA has begun to mail out letters to Donors explaining this offer. A sample copy of an offer letter is set out below. Please note that in order to accept the re-assessment being offered by the CRA you are required by the CRA to respond within 30 days of the CRA letter. Donors who have filed valid notices of objection can expect to hear from the CRA in the near future, if you have not already received a letter from them. If you do not hear from the CRA you may wish to contact them. If you have any questions regarding these re-assessments you should consult your own legal, financial or tax advisor, or contact the CRA directly. Warmest regards, PARKLANE FINANCIAL GROUP LTD.

2 May 21, 2014 DONOR TORONTO ON Our file / Notre reference Ref: GB Re: Notices of Objection Taxation Year(s) 2005 We are writing regarding your Notice(s) of Objection for 2005 taxation year(s) with respect to your participation in the Donations Canada donation program. You were previously informed that your objection was being held as the issues raised in your objection were shared by a number of other taxpayers. On June 26, 2013, amendments retroactive to 2002 were made to the Income Tax Act (Act) with respect to the treatment of gifts for tax purposes. Based on our understanding of your participation in and the structure of the Donations Canada donation program, these changes may affect your participation in the Donations Canada donation program. Your tax credit claim was based on an alleged donation, through participation in the Donations Canada donation program, of a combination of cash and property consisting of units of an Investment Sub-Trust. Your cash contribution was made by cheque payable "in-trust" for contribution to the designated registered charity (Cash Contribution). The entire tax credit claim resulting from your participation in the Donations Canada donation program was disallowed by the Canada Revenue Agency (CRA). The CRA is of the view that amendments to the Act made on June 26, 2013, allow for recognition of an amount equal to the cash contribution as a valid gift if the Cash Contribution represents at least 20% of the total donation amount upon which the tax credit was claimed (cash and property). Our understanding of the Donations Canada donation program is generally the cash contribution to a registered charitable foundation amount exceeded 20% of the donation claimed. As a result, we are prepared to resolve your objection by allowing a tax credit for qualifying gifts based on an amount equal to your Cash Contribution made under the Donations Canada donation program. However, the amount of the tax credit claim in excess of your Cash Contribution remains disallowed. Your Total Donations Canada Charitable Gifts Claimed $X Your Cash Contribution Amount $Y Your Estimated Additional Non-Refundable Tax Credit Allowed $Z There are two options available to you: 27. Reassessment allowing your Cash Contribution with a waiver of objection and appeal rights: You may choose to accept this offer and resolve your objection. We will reassess allowing a tax credit on an amount equal to your Cash Contribution. Where you accept and agree to waive your rights to further object or appeal the reassessment by signing and returning the enclosed waiver within 30 days of this letter you will also be granted interest relief for the reasons described under Option 1. 2

3 or 28. Decline to resolve your objection: Where you decline to resolve your objection by not returning a signed waiver, we will assume that you wish to continue to dispute the entire reassessment. As a result, we will not reassess, and interest will continue to accumulate on the entire outstanding amount owing on your account. A decision on any request for interest relief will be made at a later date (upon resolution of all appeal rights) and will be considered on its own merits at that time. Please read the details under Option 2. Option 1 Reassessment Allowing your Cash Contribution with a Waiver of Objection and Appeal Rights Where you sign and return the attached waiver within 30 days from the date of this letter waiving your right to pursue a further objection or appeal for a donation in excess of an amount equal to Cash Contribution, we will: give you the benefit of the doubt that you would not have pursued an objection or appeal if the amendments to the Act had been in place in 2002; assume your objection was filed to protect your rights to a tax credit based on an amount equal to your Cash Contribution based on the proposed changes to the Act; maintain the interest charges from the original due date of the return to the date of the audit reassessment on the donation claim in excess of your Cash Contribution as those charges arose entirely from your claiming the entire tax credit (cash and property) in your return; waive or cancel all interest paid or accrued on the amount of the tax credit still disallowed from the date of the audit reassessment until the date we issue your reassessment, on the basis that the delay in passage of the legislation was beyond your control; reassess your return allowing a tax credit based on an amount equal to your Cash Contribution and adjusting your interest charges as described in the preceding paragraph; continue to accrue interest on any outstanding balance after the date of reassessment; and, consider this decision to be the resolution of any previous interest relief request with respect to your participation in the Donations Canada donation program for the taxation year(s) in issue. We request that you sign and return the attached waiver to: Sudbury Intake Centre Sudbury Tax Services Office Appeals Division 1050 Notre Dame Avenue Sudbury ON P3A 5C1 Option 2 Decline to Resolve Your Objection: Where you choose not to sign and return the waiver within 30 days of the date of this letter, we will: interpret this to mean that you intend to continue to pursue an inflated tax credit; 3

4 conclude that your existing objection was not filed to protect your rights to the Cash Contribution based on the proposed changes to the Act; continue to hold your objection in abeyance pending a final decision on your objection; delay the decision on any existing request for interest relief pending finalization of all appeal rights; any future review of a request for relief will be considered on its own merits; not provide any interest relief review where a request does not exist; and interest will continue to accrue on the entire outstanding amount owing on your account. If you have not previously paid the amounts outstanding, you may wish to contact Revenue Collections to make arrangements to pay your liability. You may call a Revenue Collections officer by calling toll free Subsequent to filing your notice of objection, you may have requested an adjustment to your return unrelated to your participation in the Donations Canada donation program. These requests will be reviewed at a later date. Signing the waiver will not impact the decision on the request. If you have any questions regarding your Notice(s) of Objection or this letter, you may provide your reference number and contact information by leaving a message at toll free An Appeals Officer will contact you within two business days. Sincerely, S. Vijh Chief of Appeals 4

5 Canada Revenue Agency Agence du revenu du Canada To: Canada Revenue Agency Attention: Chief of Appeals Sudbury Intake Centre Sudbury Tax Services Office Appeals Division 1050 Notre Dame Avenue Sudbury ON P3A 5C1 Ref: GB Dear Sirs: Waiver of right of Objection or Appeal Re: Objection for the Taxation Year 2005 This is further to your letter dated, 2014 concerning the above-noted objection. I, waive my right of objection or appeal regarding the charitable donation receipt(s) issued in respect of the Donations Canada donation program relating to a combination of a cash contribution and units of an Investment Sub-Trust, if Canada Revenue Agency reassesses as follows: 1. Increase eligible donations and gifts by: $Y 2. Increase my non-refundable tax credits on donations and gifts in accordance with the Income Tax Act (Act). The Act provides a donation tax credit at the lowest applicable tax rate for the year for the first $200 of eligible donations and plus 29% of donations and gifts in excess that amount. 3. Waive or cancel interest from the date of the audit reassessment until the date of the above reassessment. I am familiar with subsections 165(1.2) and 169(2.2) of the Income Tax Act, which read as follows, and understand that I will be precluded from filing an objection or an appeal with respect to that (those) issue(s). Limitation on objections Waived issues 165(1.2) Notwithstanding subsections 165(1) and 165(1.1), no objection may be made by a taxpayer to an assessment made under subsection 118.1(11), 152(4.2), 169(3) or 220(3.1) nor, for greater certainty, in respect of an issue for which the right of objection has been waived in writing by the taxpayer. 169(2.2) Notwithstanding subsections 169(1) and 169(2), for greater certainty a taxpayer may not appeal to the Tax Court of Canada to have an assessment under this Part vacated or varied in respect of an issue for which the right of objection or appeal has been waived in writing by the taxpayer. It is agreed and understood that this agreement is binding on my heirs, executors, trustees, administrators, and any other person who might become liable for the taxes, interest, and penalties, which will ensue from this agreement. Name SIN# (signature) Date 5