Flow through shares offer investor tax benefits while providing money for mining exploration

The Province is taking steps to streamline regulation, accelerate permitting and improve the investment climate in mining

Mining is one of British Columbia’s most important industries and the provincial government is actively supporting its expansion. The Province is taking steps to streamline regulation, accelerate permitting and improve the investment climate, with key changes specifically designed to increase mineral exploration and mining in the province. Leading the way is the 20 per cent flow-through share tax credit, introduced in July, 2001.

Super Flow-through Shares: A unique tax shelter

Super Flow-Through Shares have become increasingly popular among sophisticated investors seeking to minimize their taxes. They remain one of the few legitimate tax shelters available to Canadians and offer investors a tax deduction of up to 150 per cent (depending on what province you are from) of their initial investment. Flow-through shares are approved by the Canada Revenue Agency (CRA) and are an ideal investment for (a) high net worth or high income individuals, (b) those who wish to withdraw funds from RRSP/RRIFs in a tax-effective manner, or (c) anyone faced with a high current or past tax bill (including corporations).

What are Super “Flow-Through” Shares ( SFTS ):

SFTS are common shares issued by Canadian resource companies on a “flow-through”  basis. They have the same characteristics as other common shares of the companies that  offer them, with one important difference: their issue proceeds must be spent on the  exploration (CEE)…basically 100 per cent of all money raised through flow-through must be  spent on the property.

How do they work? And what are the benefits for you?

Flow-through shares are issued by resource-based companies that are involved in the exploration and development of Canadian natural resources. In order to promote the development of the sector, the Federal Government provides significant tax incentives to investors who purchase the flow-through shares of the resource-based companies. The program has been available since the 1950s and has stood the test of time. It is right in the Tax Act.

Investors may therefore deduct the cost of flow-through shares from taxable  income, which reduces their “capital at risk” by the resulting tax savings.

If fully taken, the deductions reduce the initial investors cost base of the shares  for tax purposes to zero, and their sale proceeds are therefore taxed as capital gains, effectively converting taxable income to capital gains which is taxable at  50 per cent of the investors marginal tax rate (please see below example for British  Columbia).

If you invested $1000 in flow-through shares:

Amount of Invest: $1,000.00

Less: tax benefit of deduction of flow-through shares – federal ($290)

Less: tax benefit of deduction of flow-through shares – provincial ($147)

Less: 15 per cent non-refundable federal investment tax credit ($105)

Less: 30 per cent non-refundable provincial tax credit ($300)

Add: Income Tax on inclusion of federal tax credit: $46

Add: Income Tax on inclusion of Provincial tax credit: $131

Net Cost of $1,000 investment in flow-through shares $335.

For more information, contact:

Ministry of Provincial Revenue, Income Taxation Branch

PO Box 9434, Stn Prov Govt, 5th Floor, 1802 Douglas Street

Victoria, British Columbia V8W 9V3

Phone: 250 387-5754 Fax: 250 356-9243


or visit the Ministry of Energy and Mines Web site www.gov.bc.ca/em































Just Posted

Mix of sun and cloud for the Okanagan-Similkameen Shuswap

Chance of showers for much of the region this afternoon

Monster Truck action returns to the Okanagan for a second night

From 6 until 7 p.m. you can meet the drivers and get a close up look at the trucks

Keremeos man says stem cell therapy changed his life

Darryl Brewer says he went from being immobile with chronic pain to leading an active lifestyle

Okanagan-Shuswap Weather: Summer sun for Sunday

The forecast for the week ahead shows some rain but plenty of sun and warm tempertures.

Okanagan-Shuswap weather: Showers to start weekend, sun returning soon

Environment Canada forecasts rain on Saturday and the heat returning next week

VIDEO: Bystander training gains traction as tool to prevent sexual harassment, violence

Julia Gartley was sexually assaulted after an event, and no one stepped in to help

Update: Coroner investigating after body recovered from Okanagan Lake

Penticton fire department assisted the RCMP with the recovery of a body Saturday

Two brands of ice cream sandwiches recalled due to presence of metal

The Canadian Food Inspection Agency issued a recall on Iceberg and Originale Augustin brands

Sexual assaults, extortion on the rise even as crime rates stay low: Stats Canada

Rates of police-reported sexual assault rose for the fourth year in a row

Donkeys await your hugs and scritches at anniversary event

Turtle Valley Donkey Refuge invites public to help celebrate 20 years of care.

CDART trains North Okanagan volunteers

Regional group looking to form to help animals in cases of emergencies and disasters

Vancouver Island teens missing after vehicle found ablaze near Dease Lake, BC

RCMP say a body discovered nearby not one of the missing teens

Water quality makes swimming unsafe at three beaches near Salmon Arm

The Adams Lake Indian Band has issued a water qulity notice affecting beaches at three campgrounds.

Most Read