Fortive Separation Information for Canadian Shareholders

Important Canadian Tax Information for Shareholders Concerning the

Fortive Corporation Stock Distribution

Section 86.1 Information for Canadian Shareholders of Danaher Corporation

and Additional Information for Québec and Alberta Income Tax Filers

Dear Shareholder,

On July 2, 2016 (the “Distribution Date”), Danaher Corporation (“DHR”) completed a reorganization in which it spun-off its subsidiary Fortive Corporation (“FTV”) (the “Distribution”).  If you tendered your DHR common shares for participation in this reorganization and received a share distribution of FTV common shares, this memo may contain important Canadian tax information with respect to your share distribution.

Where a Canadian shareholder of share(s) of a foreign company (“distributing company”) receives a distribution of shares as a result of the distributing company’s eligible corporate reorganization (“spin-off”), section 86.1 of the federal Canadian Income Tax Act may permit such a spin-off share distribution to pass to the shareholder on a rollover basis, provided the shareholder complies with certain filing requirements specified in section 86.1.

This memo provides a basic overview of the filing requirements pursuant to section 86.1 as they may apply to the July 2^nd 2016  DHR spinoff of  FTV, which has been approved by the Canada Revenue Agency as eligible for Canadian tax purposes.  Additional information for Québec and Alberta income tax filers is provided in a separate section below.

Further additional information for Canadian shareholders can be found at:

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/spnffs-eng.html

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/cdnshrhldrs-eng.html

THIS INFORMATION IS SOLELY FOR ILLUSTRATIVE PURPOSES AND IS NOT TAX ADVICE. YOU SHOULD CONSULT YOUR TAX ADVISOR AS TO THE TAX CONSEQUENCES AND FILING REQUIREMENTS OF THE DISTRIBUTION.

A Summary of the Spin Off. On the Distribution Date: 

• 100% of the FTV common shares were distributed, through a pro-rata distribution, to holders of DHR common shares; and

• each DHR common shareholder received two (2) FTV common shares for every one (1) DHR common share owned at the close of business on July 1, 2016.

Basic Overview - Section 86.1 Election Requirements.  In order for the FTV common shares to pass to a shareholder on a rollover basis, paragraph 86.1(2)(f) of the Income Tax Act requires the shareholder to provide the following documentation and information to the Canada Revenue Agency (“CRA”):

1. A letter addressed to the CRA stating that the taxpayer wishes section 86.1 of the Income Tax Act to apply to the Distribution (the taxpayer must use a letter as there is currently no prescribed form for this specific election);

2. The letter must be filed with the taxpayer’s income tax return within the prescribed filing time for the taxation year in which the Distribution took place (late filings may be accepted, but penalties may apply);

3. The letter must state the following information about the DHR common shares the taxpayer owned immediately before the Distribution:

1. The number of the DHR common shares owned;

2. The aggregate adjusted cost base of all the DHR common shares to the taxpayer (i.e. the price the shareholder paid on acquisition of the DHR common shares);  

3. The aggregate fair market value of the DHR common shares (see section “Determining the Fair Market Value of the Shares” below);

4. The letter must state the following information about the FTV common shares and DHR common shares the taxpayer owned immediately after the Distribution:

1. The number of the DHR common shares owned;

2. The aggregate fair market value of the DHR common shares (see section “Determining the Fair Market Value of the Shares” below);

3. The number of the FTV common shares received;

4. The aggregate fair market value of the FTV common shares (see section “Determining the Fair Market Value of the Shares” below).

Determining the Fair Market Value of the DHR Common Shares and the FTV Common Shares.   Canadian income tax law does not specifically identify how to determine the fair market value of the DHR common shares or the FTV common shares. You should consult your tax advisor to determine the appropriate fair market values. One approach is to use the average of the high and low trading prices quoted on the New York Stock Exchange on July 1, 2016 the last trading day before the Distribution in the case of the DHR common shares held immediately before the Distribution and July 5, 2016 the first trading day after the Distribution in the case of the DHR common shares and the FTV common shares held immediately after the distribution.

After the Distribution the fair market value of a DHR common share was $78.94 and the fair market value of a FTV common share was $49.11. Based on the one (1) to two (2) distribution ratio, this means that you received $24.56 of FTV common shares for each DHR common share you owned immediately before the Distribution.

For aggregate share fair market values, these amounts should be multiplied by the applicable numbers of the respective shares.

Additional Information for Québec Income Tax Filers. 

Québec income tax filers who wish to take advantage of the section 86.1 rollover for the Distribution for both, the federal and Québec tax purposes, should enclose, in their Québec income tax returns, a copy of the section 86.1 election letter addressed to the CRA and also a separate letter addressed to Revenue Québec explaining that the enclosed copy of the letter to the CRA is in compliance with subsection 578.1(f) of the Québec Taxation Act and sets out the information required by subsection 578.3(2) of the Québec Taxation Act.  Québec filers should additionally enclose a copy of the CRA letter which confirms the eligibility of the July 2, 2016 spin-off.  The election should be sent to the tax offices where your Income Tax Return is normally sent.

Additional Information for Alberta Income Tax Filers.

If you are a corporation that has to file an Alberta Corporate Income Tax return, you should attach a copy of the federal election filed with the CRA to the Tax Return filed with the Alberta Tax and Revenue Administration.  The election should be sent to the tax offices where your Income Tax Return is normally sent.

	CRA Approval Letter (28 KB)