News Releases

CALGARY, ALBERTA – December 3, 2008 /CNW/ - Newalta Income Fund ("Newalta") (TSX: NAL.UN) announced today that the Department of Finance (Canada) has released proposed legislation relating to the "stop loss" rules contained in the Income Tax Act (Canada) (the "Tax Act"), as more particularly set forth in the Notice of Ways and Means Motion to implement certain provisions of the budget tabled in Parliament on February 26, 2008, to implement certain provisions of the economic and fiscal statement tabled in Parliament on November 27, 2008 and to implement other fiscal and economic measures (the "Proposals").

As a result of the Proposals, certain Canadian federal income tax considerations applicable to holders of trust units ("Unitholders") of Newalta in respect of the previously announced proposed conversion (the "Conversion") of Newalta from an income trust into a dividend-paying corporation ("New Newalta"), will be different than those described in the management information circular of Newalta dated November 12, 2008 (the "Information Circular"), to the extent described below.

Certain Canadian Federal Income Tax Considerations

The opinion (the "Opinion") set forth under the heading "Certain Canadian Federal Income Tax Considerations" in the Information Circular is based on the law and proposed amendments as of November 12, 2008. The summary provided below addresses the impact of the Proposals, which were announced November 28, 2008, subsequent to the date of the Opinion, on Unitholders. The Opinion, along with all other discussion of Canadian federal income tax matters contained in the Information Circular and each of the letter of transmittal and tax election package delivered to Unitholders in connection therewith (collectively, with the Information Circular, the "Canadian Tax Summary"), should now be read as taking into account the Proposals.

The Canadian Tax Summary states that a Unitholder who exchanges trust units of Newalta ("Trust Units") for common shares of New Newalta ("Common Shares") and the Cash Consideration (as defined in the Information Circular) as part of the Conversion will, unless the Unitholder makes a joint election with New Newalta under section 85 of the Tax Act, generally realize a capital gain (or capital loss) equal to the amount by which the aggregate of the fair market value of Common Shares and the amount of Cash Consideration received is greater (or less) than the adjusted cost base of the Trust Units so exchanged plus any reasonable costs incurred by the Unitholder in connection with the exchange.

As a result of the Proposals, a capital loss otherwise realized by a Unitholder that is a corporation, trust or partnership (an "Affected Unitholder") will potentially be subject to the stop loss rule. The stop loss rule generally applies where: (i) an Affected Unitholder disposes of Trust Units which are held as capital property and the Unitholder realizes a capital loss; (ii) during the period that begins 30 days before and ends 30 days after the disposition (which is currently anticipated to take place on December 31, 2008) the Affected Unitholder or a person affiliated (as that term is defined in the Tax Act) with the Affected Unitholder acquires a property that is, or is identical to, the Trust Units; and (iii) at the end of the 61 day period, the Affected Unitholder or a person affiliated with the Affected Unitholder holds the Trust Units or property that is identical to the Trust Units (the conditions referred to in (i), (ii) and (iii) are collectively referred to herein as the "Stop Loss Conditions"). The Proposals deem the Common Shares received by Affected Unitholders under the Conversion to be identical to the Trust Units and thus, if the Common Shares are held by an Affected Unitholder or a person affiliated with the Affected Unitholder, at the end of the 61 day period, the Stop Loss Conditions will generally be met. If the Stop Loss Conditions are met, the capital loss otherwise realized is denied and can only be recognized on the occurrence of certain specific events enumerated in the Tax Act (referred to herein as the "Triggering Events") which include a specified sale of the Common Shares to a person who is not affiliated with the Affected Unitholder or upon the acquisition of control of an Affected Unitholder that is a corporation.

Thus, Affected Unitholders who participate in the Conversion and who hold the Common Shares received under the Conversion at the end of the 61 day period referred to above will generally be subject to the stop loss rule and the capital loss otherwise realized will be denied until the occurrence of a Triggering Event.

The stop loss rules are complicated and Affected Unitholders should contact their own tax advisors regarding the application of the Proposals to the Conversion having regard to their own particular circumstances.

Newalta Income Fund is Canada's largest industrial waste management and environmental services provider and focuses on maximizing the value inherent in industrial waste through the recovery of saleable products and recycling. It also provides environmentally sound disposal of solid, non-hazardous industrial waste. With talented people and a national network of facilities, Newalta serves customers in the automotive, forestry, lead, manufacturing, mining, oil and gas, petrochemical, pulp and paper, refining, steel and transportation service industries. Providing solid investor returns, exceptional customer service, safe operations and environmental stewardship has enabled Newalta to expand into new service sectors and geographic markets. Newalta Income Fund's units trade on the TSX as NAL.UN. For more information, visit www.newalta.com.

This news release contains statements that may constitute "forward-looking information" or "forward-looking statements" (collectively, "forward-looking information") within the meaning of applicable Canadian securities legislation. Forward-looking information includes, among others, statements regarding business strategy, plans and other expectations, beliefs, goals, objectives, information and statements about possible future events. Specific forward-looking information contained in this news release include statements regarding the Conversion and certain Canadian federal income tax considerations applicable to Unitholders in respect of the Conversion. Readers are cautioned not to place undue reliance on such forward-looking information. Forward-looking information is based on current expectations, estimates and assumptions that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by Newalta and described in the forward-looking information contained in this news release. Among the various factors that could cause results to vary materially from those indicated in the forward-looking information include, but are not limited to, failure to receive approval of the Conversion from Unitholders or relevant regulatory authorities and whether the Proposals will be formally enacted in their current or amended form or at all. Readers should also be aware that the forward-looking information is also affected by the risk factors described in Newalta's Annual Information Form and those set forth from time to time in Newalta's continuous disclosure filings with Canadian securities regulatory authorities, which are available through Newalta's website at www.newalta.com and on the SEDAR website at www.sedar.com. No assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur or, if any of them do so, what benefits Newalta will derive therefrom.