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US federal income tax purposes. As a result, the Trust itself is not subject to US federal income tax. Instead, the Trust’s |
income and expenses “flow through” to the Shareholders, and the Trustee reports the Trust’s income, gains, losses |
and deductions to the Internal Revenue Service (“IRS”) on that basis. Taxation of US Shareholders Shareholders generally are treated, for US federal income tax |
purposes, as if they directly owned a pro rata share of the underlying assets held by the Trust. Shareholders are also treated |
as if they directly received their respective pro rata share of the Trust’s income, if any, and as if they directly incurred |
their respective pro rata share of the Trust’s expenses. In the case of a Shareholder that purchases Shares for cash, its |
initial tax basis in its pro rata share of the assets held by the Trust at the time it acquires its Shares is equal to its cost |
of acquiring the Shares. In the case of a Shareholder that acquires its Shares as part of a creation of a Basket, the delivery |
of gold to the Trust in exchange for the Shares is not a taxable event to the Shareholder, and the Shareholder’s tax |
basis and holding period for the Shares are the same as its tax basis and holding period for the gold delivered in exchange |
therefore (except to the extent of any cash contributed for such Shares). For purposes of this discussion, it is assumed that all |
of a Shareholder’s Shares are acquired on the same date and at the same price per Share. Shareholders that hold multiple |
lots of Shares, or that are contemplating acquiring multiple lots of Shares, should consult their tax advisors. When the Trust sells or transfers gold, for example to pay expenses, |
a Shareholder generally will recognize gain or loss in an amount equal to the difference between (1) the Shareholder’s pro |
rata share of the amount realized by the Trust upon the sale or transfer and (2) the Shareholder’s tax basis for its pro |
rata share of the gold that was sold or transferred. Such gain or loss will generally be long-term or short-term capital gain or |
loss, depending upon whether the Shareholder has a holding period in its Shares of longer than one year. A Shareholder’s |
tax basis for its share of any gold sold by the Trust generally will be determined by multiplying the Shareholder’s total |
basis for its Shares immediately prior to the sale, by a fraction the numerator of which is the amount of gold sold, and the denominator |
of which is the total amount of the gold held by the Trust immediately prior to the sale. After any such sale, a Shareholder’s |
tax basis for its pro rata share of the gold remaining in the Trust will be equal to its tax basis for its Shares immediately prior |
to the sale, less the portion of such basis allocable to its share of the gold that was sold. Upon a Shareholder’s sale of some or all of its Shares, |
the Shareholder will be treated as having sold a pro rata share of the gold held in the Trust at the time of the sale. Accordingly, |
the Shareholder generally will recognize a gain or loss on the sale in an amount equal to the difference between (1) the amount |
realized pursuant to the sale of the Shares, and (2) the Shareholder’s tax basis for the Shares sold, as determined in the |
manner described in the preceding paragraph. A redemption of some or all of a Shareholder’s Shares |
in exchange for the underlying gold represented by the Shares redeemed generally will not be a taxable event to the Shareholder. |
The Shareholder’s tax basis for the gold received in the redemption generally will be the same as the Shareholder’s |
tax basis for the Shares redeemed. The Shareholder’s holding period with respect to the gold received should include |
the period during which the Shareholder held the Shares redeemed. A subsequent sale of the gold received by the Shareholder |
will be a taxable event. An Authorized Participant and other investors may be able to |
re-invest, on a tax-deferred basis, in-kind redemption proceeds received from exchange-traded products that are substantially similar |
to the Trust in the Trust’s Shares. Authorized Participants and other investors should consult their tax advisors as to whether |
and under what circumstances the reinvestment in the Shares of proceeds from substantially similar exchange-traded products can |
be accomplished on a tax-deferred basis. 21 Under current law, gains recognized by individuals, estates |
or trusts from the sale of “collectibles,” including physical gold, held for more than one year are taxed at a maximum |
federal income tax rate of 28%, rather than the 20% rate applicable to most other long-term capital gains. For these purposes, |
gains recognized by an individual upon the sale of Shares held for more than one year, or attributable to the Trust’s sale |
of any physical gold which the Shareholder is treated (through its ownership of Shares) as having held for more than one year, |
generally will be taxed at a maximum rate of 28%. The tax rates for capital gains recognized upon the sale of assets held by an |
individual US Shareholder for one year or less or by a corporate taxpayer are generally the same as those at which ordinary income |
is taxed. In addition, high-income individuals and certain trusts and |
estates are subject to a 3.8% Medicare contribution tax that is imposed on net investment income and gain. Shareholders should |
consult their tax advisor regarding this tax. Brokerage Fees and Trust Expenses Any brokerage or other transaction fees incurred by a Shareholder |
in purchasing Shares is treated as part of the Shareholder’s tax basis in the Shares. Similarly, any brokerage fee incurred |
by a Shareholder in selling Shares reduces the amount realized by the Shareholder with respect to the sale. Shareholders will be required to recognize a gain or loss |
upon a sale of gold by the Trust (as discussed above), even though some or all of the proceeds of such sale are used by |
the Trustee to pay Trust expenses. Shareholders may deduct their respective pro rata share of each expense incurred by the |
Trust to the same extent as if they directly incurred the expense. Shareholders who are individuals, estates or trusts, |
however, may be required to treat some or all of the expenses of the Trust, to the extent that such expenses may be deducted, |
as miscellaneous itemized deductions. Under the Tax Cuts and Jobs Act (P.L. 115-97), miscellaneous itemized deductions, |
including expenses for the production of income, will not be deductible for either regular federal income tax or alternative |
minimum tax purposes for taxable years beginning after December 31, 2017 and before January 1, 2026. Investment by Regulated Investment Companies Mutual funds and other investment vehicles which are “regulated |
investment companies” within the meaning of Code section 851 should consult with their tax advisors concerning (1) the likelihood |
that an investment in Shares, although they are a “security” within the meaning of the Investment Company Act of 1940, |
may be considered an investment in the underlying gold for purposes of Code section 851(b), and (2) the extent to which an |
investment in Shares might nevertheless be consistent with preservation of their qualification under Code section 851. In recent |
administrative guidance, the IRS stated that it will no longer issue rulings under Code section 851(b) relating to the determination |
of whether or not an instrument or position is a “security”, but, instead, intends to defer to guidance from the SEC |
for such determination. United States Information Reporting and Backup Withholding |
Tax for US and Non-US Shareholders The Trustee or the appropriate broker will file certain information |
returns with the IRS, and provides certain tax-related information to Shareholders, in accordance with applicable Treasury Regulations. |
Each Shareholder will be provided with information regarding its allocable portion of the Trust’s annual income (if any) |
and expenses. A US Shareholder may be subject to US backup withholding tax |
in certain circumstances unless it provides its taxpayer identification number and complies with certain certification procedures. |
Non-US Shareholders may have to comply with certification procedures to establish that they are not a US person in order to avoid |
the backup withholding tax. The amount of any backup withholding tax will be allowed as |
a credit against a Shareholder’s US federal income tax liability and may entitle such a Shareholder to a refund, provided |
that the required information is furnished to the IRS. 22 Income Taxation of Non-US Shareholders The Trust does not expect to generate taxable income except |
for gains (if any) upon the sale of gold. A Non-US Shareholder generally is not subject to US federal income tax with respect to |
gains recognized upon the sale or other disposition of Shares, or upon the sale of gold by the Trust, unless (1) the Non-US |
Shareholder is an individual and is present in the United States for 183 days or more during the taxable year of the sale or other |
disposition, and the gain is treated as being from United States sources; or (2) the gain is effectively connected with the conduct |
by the Non-US Shareholder of a trade or business in the United States. Taxation in Jurisdictions other than the United States Prospective purchasers of Shares that are based in or acting |
out of a jurisdiction other than the United States are advised to consult their own tax advisers as to the tax consequences, under |
the laws of such jurisdiction (or any other jurisdiction not being the United States to which they are subject), of their purchase, |
holding, sale and redemption of or any other dealing in Shares and, in particular, as to whether any value added tax, other consumption |
tax or transfer tax is payable in relation to such purchase, holding, sale, redemption or other dealing. ERISA and Related Considerations The Employee Retirement Income Security Act of 1974, as amended |
(“ERISA”), and/or Code section 4975 impose certain requirements on certain employee benefit plans and certain other |
plans and arrangements, including individual retirement accounts and annuities, Keogh plans, and certain commingled investment |
vehicles or insurance company general or separate accounts in which such plans or arrangements are invested (collectively, “Plans”), |
and on persons who are fiduciaries with respect to the investment of “plan assets” of a Plan. Government plans and |
some church plans are not subject to the fiduciary responsibility provisions of ERISA or the provisions of section 4975 of the |
Code, but may be subject to substantially similar rules under other federal law, or under state or local law (“Other Law”). In contemplating an investment of a portion of Plan assets in |
Shares, the Plan fiduciary responsible for making such investment should carefully consider, taking into account the facts and |
circumstances of the Plan and the “Risk Factors” discussed above and whether such investment is consistent with its |
fiduciary responsibilities under ERISA or Other Law, including, but not limited t (1) whether the investment is permitted under |
the Plan’s governing documents, (2) whether the fiduciary has the authority to make the investment, (3) whether the investment |
is consistent with the Plan’s funding objectives, (4) the tax effects of the investment on the Plan, and (5) whether the |
investment is prudent considering the factors discussed in this report. In addition, ERISA and Code section 4975 prohibit a broad |
range of transactions involving assets of a plan and persons who are “parties in interest” under ERISA or “disqualified |
persons” under section 4975 of the Code. A violation of these rules may result in the imposition of significant excise taxes |
and other liabilities. Plans subject to Other Law may be subject to similar restrictions. It is anticipated that the Shares will constitute “publicly |
offered securities” as defined in the Department of Labor “Plan Asset Regulations,” §2510.3-101 (b)(2) |
as modified by section 3(42) of ERISA. Accordingly, pursuant to the Plan Asset Regulations, only Shares purchased by a Plan, and |
not an interest in the underlying assets held in the Trust, should be treated as assets of the Plan, for purposes of applying |
the “fiduciary responsibility” rules of ERISA and the “prohibited transaction” rules of ERISA and the |
Code. Fiduciaries of plans subject to Other Law should consult legal counsel to determine whether there would be a similar result |
under the Other Law. Investment by Certain Retirement Plans Code section 408(m) provides that the acquisition of a “collectible” |
by an individual retirement account (“IRA”) or a participant-directed account maintained under any plan that is tax-qualified |
Subsets and Splits