Joint Tax Election

The following contains important information concerning the Joint Tax Election that is being made available to certain former RNW Shareholders who disposed of their RNW Shares to TransAlta as part of the Arrangement. Please note the Joint Tax Election is only available to persons who are resident in Canada (or partnerships that have at least one member that is a resident in Canada) for Canadian federal income tax purposes and who satisfy the eligibility requirements noted below.

A link to the online Joint Tax Election Request Form used to make a Joint Tax Election can be found at the bottom of this page.

Any former RNW Shareholder that is considering making a Joint Tax Election should consult with their own tax advisor as soon as possible to determine whether a Joint Tax Election is appropriate in their circumstances and to ensure that any election is validly made.

Overview

The Joint Tax Election, if validly made, may allow a former RNW Shareholder (or where the former RNW Shareholder is a partnership, a partner thereof) to defer all or a portion of the gain that may otherwise be recognized for Canadian income tax purposes on the transfer of RNW Shares to TransAlta. Through a valid Joint Tax Election, a former RNW Shareholder is generally able to determine an amount, referred to as the "Elected Amount", that will be treated as the proceeds of disposition for its RNW Shares for Canadian federal income tax purposes. The Elected Amount is subject to certain limitations set out under the Income Tax Act (Canada), and very generally may not be:

• less than the aggregate of the cash consideration received under the Arrangement;
• less than the lesser of (i) the adjusted cost base of the RNW Shares disposed of under the Arrangement, and (ii) the fair market value of the RNW Shares disposed of under the Arrangement; or
• greater than the fair market value of the RNW Shares in respect of which the Joint Tax Election.

For a more information concerning the Joint Tax Election, please refer to the Circular that was prepared and provided to RNW Shareholders in connection with the Arrangement (see under the heading, Certain Canadian Federal Income Tax Considerations - Joint Tax Election). The Circular can be found here. Former RNW Shareholders are also referred to Information Circular 76-19R3 and CRA Interpretation Bulletin IT 291R3 for further information respecting the Joint Tax Election.

Eligibility Requirements

The Joint Tax Election is only available to a former RNW Shareholder that meets the following requirements:

1. The former RNW Shareholder disposed of their RNW Shares to TransAlta and received TransAlta Shares as all or a part of the consideration received for their RNW Shares. The Joint Tax Election is not available to a former RNW Shareholder that received only cash consideration.
2. At the time of the Arrangement, the former RNW Shareholder must have been either (i) a person (which includes corporations and trusts) that was resident in Canada, or (ii) a partnership that had at least one member that was a person resident in Canada, in each case for Canadian federal income tax purposes. The Joint Tax Election is only applicable for Canadian income tax purposes, and is not available to non-residents of Canada.
3. The former RNW Shareholder (or a member thereof where the former RNW Shareholder is a partnership) must be subject to Canadian federal income tax under Part I of the Income Tax Act (Canada). Accordingly, a Joint Tax Election is not available in respect of RNW Shares that were held through a tax-exempt account, including, but not limited to, a registered retirement savings plan (RRSP), registered retirement income fund (RRIF), deferred profit-sharing plan (DPSP), registered education savings plan (RESP), registered disability savings plan (RDSP), or a tax-free savings account (TFSA)

For greater certainty, a former RNW Shareholder should NOT file a Joint Tax Election if any of the following apply:

• the former RNW Shareholder is a non-resident of Canada who is not required to file a Canadian tax return. Non-residents of Canada who dispose of shares in a Canadian corporation may have to file a Canadian tax return. Please discuss your situation with your tax advisor;
• the former RNW Shareholder held all of their RNW Shares in a RRSP, RRIF, RESP, RPP, TFSA or other tax-exempt Canadian plan;
• the former RNW Shareholder elected to receive ONLY cash and did NOT receive any TransAlta Shares as part of the transaction.

In addition, a former RNW Shareholder generally should not file a Joint Tax Election where:

• the former RNW Shareholder realized a capital loss for tax purposes as a result of the disposition of the RNW Shares;
• the former RNW Shareholder elected to receive ONLY TransAlta Shares as part of the transaction and does not wish to recognize a capital gain. In this case, pursuant to Section 85.1 of the Income Tax Act (Canada), the RNW Shares are generally deemed to have been disposed of for proceeds equal to the adjusted cost base of the RNW Shares.

Former RNW Shareholders should consult their tax advisors with respect to the above.

Process for making a Joint Tax Election

The relevant Canadian federal tax election form for making a Joint Tax Election is CRA Form T2057 (or CRA Form T2058 where the former RNW Shareholder is a partnership). Certain other provincial jurisdictions, including Quebec, may require that a separate joint election be filed for provincial income tax purposes. A former RNW Shareholder should consult their own tax advisor to determine whether separate election forms are required to be filed with any provincial taxing authority.

To make a Joint Tax Election, a former RNW Shareholder must first provide the relevant information to TransAlta through the online Joint Tax Election Request Form using the link found at the end of this page.

The relevant information needed to complete the online Tax Election Form includes:

• the number of RNW Shares transferred to TransAlta;
• the number of TransAlta Shares received;
• the amount of cash consideration (if any) received in addition to TransAlta Shares; and
• the adjusted cost base of the RNW Shares transferred to TransAlta; and
• the "elected amount" that is to be treated as the "proceeds of disposition" for purposes of the Income Tax Act (Canada). See above and consult with your own tax advisor for further information about the elected amount.

As the number of TransAlta Shares and the amount of cash consideration actually received by a former RNW Shareholder could differ from the amounts the RNW Shareholder had originally elected to receive as part of the exchange, former RNW Shareholders should review the information obtained from their financial institution to confirm the actual number of TransAlta Shares and actual cash consideration received.

Timing

The relevant information described above must be submitted to TransAlta through the online Joint Tax Election Request Form on or before January 3, 2024 (being the date that is 90 days after Effective Date of the Arrangement) (referred to as the "Tax Election Deadline"). TransAlta may not make a Joint Tax Election with a former RNW Shareholder who does not provide the relevant information through the website on or before the Tax Election Deadline. After receipt of all of the relevant information through the Joint Tax Election Request Form, and provided that the information provided complies with the requirements of the Income Tax Act (Canada), TransAlta will deliver [by email], within 90 days of the Tax Election Deadline and in any case prior to March 31, 2024, an executed copy of the Joint Tax Election containing the relevant information to each former RNW Shareholder. Each former RNW Shareholder will be solely responsible for executing their portion of the Joint Tax Election and submitting it to the CRA (and, where applicable, to any provincial tax authority) within the required time. In order to avoid late filing penalties, the Joint Tax Election is required to be filed with the CRA (and, where applicable, with any provincial tax authority) on or before the earliest day by which either TransAlta or the former RNW Shareholder is required to file an income tax return for the taxation year that includes the Effective Date of the Arrangement.

TransAlta's 2023 taxation year is scheduled to end on December 31, 2023 but it could end earlier as a result of an event such as an amalgamation. Accordingly, all former RNW Shareholders should give immediate attention to this matter and in particular should consult their own tax advisors without delay.

TransAlta will not be responsible for the proper completion of any election form or have any other liability or obligation in respect thereof except for the obligation of TransAlta to provide an executed copy of the Joint Tax Election containing the relevant information to each former RNW Shareholder that has submitted the relevant information to TransAlta on or before the Tax Election Deadline. TransAlta will not be liable for or have any obligation in respect of any taxes, interest or penalties resulting from the failure of a former RNW Shareholder to properly complete or file such election forms in the manner and within the time prescribed by the Income Tax Act (Canada) (or any applicable provincial legislation).

Online Tax Election Form

To access the online Joint Tax Election Request Form and make a Joint Tax Election, please click here. Before clicking this link, please ensure you have the relevant information noted above available.