Foreign Account Tax Compliance Provisions  Management Discussion & Analysis Annual Report  2013  32  FATCA imposes a reporting and 30% withholding tax regime with respect to (a) certain U.S. source income (including interest,  dividends, royalties, and other passive income) and gross proceeds from the sale or other disposition of property that can produce  U.S. source interest or dividends and (b) certain non-U.S. source payments paid to non-compliant foreign (i.e., non-U.S.) “financial  institutions” (or FFIs). For purposes of the FATCA rules, Alaris will likely be treated as an FFI, and therefore intends to comply with  FATCA.  In early 2014, Canada and the United States entered into an intergovernmental agreement (the “IGA”) to facilitate compliance with  FATCA by Canadian financial institutions. Under the IGA, Alaris (and its subsidiaries) will generally be required to (i) register with the  U.S. Internal Revenue Service (the "IRS") and acquire an identifying number, (ii) perform specified diligence to determine whether they  have any “U.S. reportable accounts” and (iii) report information to the Canadian Revenue Agency (“CRA”) about their US “account  holders”, which could include certain of Alaris’ shareholders. The CRA will provide information about U.S. reportable accounts to the  IRS in a manner consistent with the protections provided in the Canada-U.S. tax treaty. Equity and debt interests that are regularly traded on an established securities market are not treated as “financial accounts” under  the IGA. If the Common Shares are regularly traded on an established securities market, Alaris will not be required to provide  information to the CRA about U.S. holders of Common Shares. The Common Shares are regularly traded on an established securities  market and as such, Alaris does not expect to be required to report information about such US holders of its Common Shares to the  CRA. However, should the Common Shares no longer be considered to be regularly traded on an established securities market,  Alaris’ reporting obligations under FATCA may change. This description is based on guidance issued by the IRS and the Treasury Department, including recently issued final regulations, IRS  notices and intergovernmental agreements. Future guidance, including explanations of and rulings interpreting current authorities, may  affect the application of FATCA to Alaris in a manner that is unfavourable to Alaris and holders of Common Shares. Generally, unfavourable rules apply to U.S. shareholders who own and dispose of shares of a PFIC for any year during which the U.S.  shareholder holds such shares (regardless of whether the company continues to be a PFIC), including, without limitation, increased  tax liabilities under U.S. tax laws and regulations and additional reporting requirements. Specifically, if a non-U.S. entity is classified  as a PFIC, any gain on disposition of shares of a PFIC and any "excess distribution" received by a U.S. holder would be: (i) deemed  to have been earned rateably over the period such holder owns such shares: (ii) taxed at ordinary income tax rates; and (3) subject to  an interest charge for the deemed deferral in payment of the tax. A non-U.S. entity will be a PFIC for any taxable year in which either (1) at least 75% of its gross income is passive income or (2) at  least 50% of the value (determined on the basis of a quarterly average) of its assets is attributable to assets that produce or are held  for the production of passive income. Based upon the value of our assets and the scope of our current and projected operations and financial expectations, we believe that  we were not a PFIC during our prior tax years and we expect that we will not become a PFIC during our current tax year ending  December 31, 2014 or for the foreseeable future. However, the tests for determining the PFIC classification are fundamentally fact  specific in nature, based on income and assets, which cannot be determined until the close of the taxation year in question and are  determined annually. Additionally, the analysis depends, in part, on the application of complex U.S. federal income tax rules, which  are subject to differing interpretations. Consequently, there can be no assurance that we have never been and will not become a PFIC  for any tax year during which U.S. shareholders hold Common Shares. If Alaris does become a PFIC, it does not intend to make available to U.S. shareholders the financial information necessary to make a  “qualified electing fund” election. However, provided the Common Shares continue to be regularly traded on an established securities  market, if Alaris becomes a PFIC, U.S. shareholders will be able to make “mark-to-market” elections with respect to their Common  Shares. Alaris urges U.S. investors to consult their own tax advisors regarding the possible application of the PFIC rules  Passive Foreign Investment Company (“PFIC”) Status for U.S. Shareholders 