Are flow-through share investments right for you?

By: Jim McConnery, CPA, CA, TEP 

Partner
jmcconnery@welchllp.com
613-236-9191 #529

Our tax regime includes an interesting opportunity for taxpayers who acquire newly issued Flow-Through Shares (“FTS”) from Canadian resource companies. Based on meeting specific requirements, the investor is allowed to deduct the cost of the investment against taxable income, provided that the underlying company spends the funds on exploration and development expenses, and agrees to forgo the expense deduction. Stated another way, the company is passing the expense deduction on to investors. In addition to the tax deduction, an investor will generally get a 15% federal tax credit (some investments also qualify for a provincial tax credit).

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