TMX group

CALGARY, Feb. 28 /CNW/ - (TSX -- COS.UN) - Canadian Oil Sands Trust (the
"Trust") today reports the tax information for the total cash distributions
declared and paid in 2005 to Unitholders resident in Canada and the United
States.

Unitholders are strongly encouraged to consult their tax advisors with
respect to their particular circumstances.

Canadian tax information for Unitholders resident in Canada
The following information is based on the Trust's understanding of the
Income Tax Act (Canada) and regulations thereunder, and is provided for
general information only. T3 Statement of Trust Income Allocations and
Designations forms are expected be mailed to the Trust's Unitholders on or
before March 31, 2006 by your financial institution if the Units are held in
non-registered or nominee form, or by Computershare if the Units are held in
registered form.

<<

-------------------------------------------------------------------------
                                                                Cdn$ Tax
                                                 Cdn$ Taxable   Deferred
                                  Cdn$           Amount Per     Amount
                                  Total Cash     Unit           Per Unit
                                  Distribution   (95.17358      (4.82642
Record Date      Payment Date     Per Unit       per cent)      per cent)
-------------------------------------------------------------------------
Nov. 4, 2005     Nov. 30, 2005    $1.00          $0.95174       $0.04826
Aug. 3, 2005     Aug. 31, 2005    $0.50          $0.47587       $0.02413
May 5, 2005      May 31, 2005     $0.50          $0.47587       $0.02413
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total                             $2.00          $1.90348       $0.09652
-------------------------------------------------------------------------

The "Taxable Amount" is the portion of the distributions that is to be
included in the taxable income of the Unitholders. The "Return of Capital"
amount of the distributions is not taxable but should be deducted from the
adjusted cost base of a holder's units in the Trust. No amounts are required
to be reported for tax purposes in respect of cash distributions received by a
Registered Retirement Savings Plan, Registered Pension Plan, Registered
Retirement Income Fund or Deferred Profit Sharing Plan or any other such
registered plans.
Please note that, historically, the Trust has accrued the distribution
made to Unitholders as a payable at each quarter end, even though the
distribution was not actually paid until the subsequent quarter. This resulted
in Canadian Unitholders receiving a distribution in February of a given year
but having the taxable portion of such distribution payment be treated as
income for the prior tax year. Having considered market practise and having
received advice from legal counsel, Canadian Oil Sands amended the Trust
Indenture in December 2005 to allow, commencing with distribution payments in
2006, the Trust to distribute all income, less applicable expenses, received
or expected to be received in a given quarter as a distribution to Unitholders
and thereby to record such distribution in the quarter paid. As a result, the
distribution that was declared on January 25, 2006 and payable on February 28,
2006 to holders of record on February 6, 2006, will be reflected in 2006. This
change in how Unitholder distributions are recorded has no impact on the
ultimate distributions declared and paid to the Unitholders or on the timing
of such payments, nor does it impact Canadian Oil Sands' net income or funds
from operations. Rather, it provides symmetry of Canadian Unitholders being
taxed and receiving payment of a distribution in the same year. The Trust
expects that this should eliminate some of the confusion that certain Canadian
Unitholders previously had with regard to the timing and taxability of the
distribution payment made in the first quarter of each year. A full copy of
the current Trust Indenture can be found at www.cos-trust.com under corporate
governance, or at www.sedar.com.

Tax information for Unitholders resident in the United States
Canadian Oil Sands believes that the distributions paid in the 2005
calendar year are considered foreign-source dividend income under U.S. federal
income tax principles. Providing that applicable holder-level requirements are
met, these distributions are "qualified dividends," eligible for taxation at
reduced rates under U.S. federal income tax legislation. However, Canadian Oil
Sands has not received an IRS letter ruling or tax opinion from its tax
advisors on these matters, and the individual taxpayer's situation must be
considered before making this determination.
Distributions payable to non-residents of Canada are normally subject to
a withholding tax of 25 per cent as prescribed by the Income Tax Act of
Canada. However, the withholding tax for residents of the United States is
prescribed at 15 per cent in accordance with a reciprocal tax treaty between
Canada and the United States. U.S. taxpayers may be eligible for a foreign tax
credit with respect to the Canadian withholding taxes paid. Other
jurisdictions may also have reciprocal tax treaties that would reduce the
withholding tax rate. A Canadian NR4 (non-resident) supplemental form
detailing the Canadian tax withheld and remitted to the Canadian government
will be mailed to the Trust's non-resident Unitholders.
The following table provides the breakdown of the amount of cash
distribution, prior to the Canadian withholding tax, paid by Canadian Oil
Sands in 2005, and is provided for information purposes only.

-------------------------------------------------------------------------
                                                                Per cent
                                                                      of
                                      Cdn$/                       Distri-
                                      US$      US$       Per      bution
                                      Currency Equi-     cent     Return
                            Cdn$      Exchange valent    of           of
                            Distri-   Rate on  Distri-   Distri- Capital/
Record        Payment       bution    Payment  bution    bution  Capital
Date          Date          Per Unit  Date     Per Unit  Taxable    Gain
-------------------------------------------------------------------------
Nov. 4, 2005  Nov. 30, 2005   $1.00   $1.1674  $0.8566   70.92%   29.08%

Aug. 3, 2005  Aug. 31, 2005   $0.50   $1.1889  $0.4206   70.92%   29.08%

May 5, 2005   May 31, 2005    $0.50   $1.2510  $0.3997   70.92%   29.08%

Feb. 9, 2005  Feb. 28, 2005   $0.50   $1.2314  $0.4060   70.92%   29.08%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total                         $2.50            $2.0829   70.92%   29.08%
-------------------------------------------------------------------------

It is possible that the U.S. dollar amount was different for non-
registered, or beneficial, Unitholders receiving their payment from an
intermediary or brokerage firm using different exchange rates.

Tax considerations for DRIP participants
Unitholders also should be aware that participating in the Trust's
Premium Distribution, Distribution Reinvestment and Optional Unit Purchase
Plan ("DRIP") does not relieve them of any liability for Canadian income
taxes, or if they are a non-resident of Canada, for any Canadian withholding
taxes that may be payable on the distribution.
For Canadian Unitholders participating in the Premium Distribution option
of the Trust's DRIP, the up to an extra two per cent of the declared
distribution they received is generally considered to be income for tax
purposes. Please note the Premium Distribution option is not available to U.S.
residents.
More information on the income tax consequences of participating in the
DRIP is available by requesting a copy of the DRIP, or through the Trust's Web
site. Unitholders are advised to consult their own tax advisors as to their
particular income tax situation regarding all tax-related matters.

Other
For any questions regarding the supplemental tax forms, please contact
your financial institution if your units are held in non-registered form. If
your units are held in registered form, contact the Trustee and Transfer
Agent, Computershare Trust Company of Canada, at 1-800-564-6253. For all other
inquiries, please contact the Trust.
Further information on distributions paid by the Trust, including a tax
summary of distributions paid since inception, is available on the Trust's Web
site at www.cos-trust.com under investor information, distributions.

Canadian Oil Sands Trust is an open-ended investment trust that generates
income from its indirect 35.49 per cent working interest in the Syncrude Joint
Venture. The Trust currently has approximately 92.5 million units outstanding,
which trade on the Toronto Stock Exchange under the symbol COS.UN. The Trust
is managed by Canadian Oil Sands Limited.

Canadian Oil Sands Limited
Marcel Coutu
President & Chief Executive Officer

Units Listed - Symbol: COS.UN
Toronto Stock Exchange
>>