The following summary is not intended to be legal or tax advice to any particular holder of Common Shares of Medical Facilities Corporation. Holders of Common Shares (as well as prospective purchasers) should consult their own tax advisors in determining the application to them of any Canadian federal, provincial, U.S. federal, state, local, foreign or other tax consequences of the purchase, ownership and disposition of Common Shares.

Dividends on common shares are paid monthly (currently Cdn$0.09375 per common share per month). Prior to the May 31, 2011 conversion from an Income Participating Security structure to a Common Share structure, the monthly distribution of Cdn$0.0917 consisted of an interest payment of Cdn$0.0615 and a dividend of Cdn$0.0302.

Canadian taxpayer
Canadian resident individuals who receive "eligible dividends" in 2006 and subsequent years will be entitled to an enhanced gross-up and dividend tax credit, resulting in a reduction of income taxes otherwise payable on those dividends. Medical Facilities Corporation has designated that all of its dividends paid in 2006 are "eligible dividends" for these purposes. Medical Facilities Corporation also advises that all of its dividends will be designated as "eligible dividends" for 2007 and subsequent years, unless indicated otherwise.

United States taxpayer - Withholding Tax Considerations
Dividends received by U.S. persons from "qualified foreign corporations" qualify as "qualified dividends" and, under current regulations, are generally subject to a preferential tax rate if the U.S. person receiving the dividend meets the "holding period requirement" described below.

Dividends paid by Medical Facilities Corporation to a U.S. shareholder (who, at all relevant times, is a resident of the United States and not resident, or deemed to be resident, in Canada, for purposes of the Canada-U.S. Income Tax Convention) in respect of the common shares generally will be subject to a 15% Canadian withholding tax.

Dividends paid by Medical Facilities Corporation to a U.S. shareholder that is exempt from tax in the United States may be exempt from Canadian withholding tax. Such holders should consult their own tax advisors with respect to the availability of an exemption to Canadian withholding tax pursuant to Article XXI of the Canadian Treaty. U.S. holders that are being subject to Canadian withholding tax in excess of the amounts set out above are encouraged to consult their own brokers and confirm that their distributions are being appropriately taxed.

The "holding period requirement" requires the stock to have been held for more than 60 days in the 121-day period that begins 60 days before the ex-dividend date. A "qualified foreign corporation" includes any foreign corporation (1) incorporated in the possession of the U.S., (2) eligible for the benefits of a comprehensive income tax treaty with the U.S., or (3) whose stock is "readily tradable on an established securities market in the United States."

The term "qualified foreign corporation" does not include any foreign corporation that, for the taxable year of the corporation in which the dividend is paid, or the preceding taxable year, is a passive foreign investment company (PFIC).
Medical Facilities Corporation is a corporation formed under the laws of the province of British Columbia in Canada, and therefore should be eligible for treaty benefits under the Canada-United States Income Tax Convention, which is a treaty that the Treasury Department has determined is satisfactory for this purpose. Assuming that Medical Facilities Corporation is not currently a PFIC and was not a PFIC in the preceding tax year, dividends received by U.S. persons meeting the holding period requirement from Medical Facilities Corporation should be treated as dividends from a "qualified foreign corporation" and therefore eligible for "qualified dividend" status.