To encourage investment in more speculative, resource-based ventures, the Federal and Provincial Governments of Canada have created Flow-Through Investments
Who should invest in Flow-Through Shares?
Typically, Investors in the top marginal tax bracket would receive the most benefit from a flow-through investment. However, most investors, regardless of their income level, would likely receive some benefit from investing in flow-through shares.
Investors should also be comfortable with risk and volatility in the value of their investment. Due to the highly speculative nature of resource exploration, the value of the investment could vary widely.
What am I investing in?
An investment in a Flow-Through Share is required to be used for the exploration and / or development towards production and must be kept separate from general operating funds. After the tax deductions are made, capital gains are possible. Some shares even allow for conversion into other investments.
What are the tax advantages?
If you were to invest $10,000 in flow through shares, providing that they are eligible for the tax breaks, you can claim the full $10,000 on your tax return. If you are in the 40% tax bracket, that would equate to a $4,000 tax return for that year.
What are the risks/disadvantages?
If you are experienced with the Canadian mining/oil sector, you will know that this market can be fairly volatile. Also, when you purchase flow through shares, you typically have to hold onto them for 18-24 months before you can sell them.
What is a flow-through limited partnership?
A flow-through limited partnership is a portfolio of flow-through shares of Canadian resource companies that combines unique tax advantages with the prospect for capital appreciation.
Early-stage oil and gas, or mining exploration companies receive special tax deductions that can be transferred, in the form of flow-through shares, to investors. Flow-through limited partnerships purchase flow-through shares and investors in the limited partnerships receive a 100 per cent tax deduction for the amount invested. Typically, after a period of 18 to 24 months, assets of the limited partnership roll over tax-deferred to units of a resource-based mutual fund
Who can benefit from flow-through limited partnerships?
• Individuals seeking an investment tax shelter to reduce current taxable income
• Investors who wish to reduce risk through a diversified portfolio, instead of investing in flow- through shares of a single company
• Investors who wish to defer tax and convert fully taxable income in the current year into capital gains taxed at a later date
• Individuals looking to invest with a proven, disciplined investment management team.
For more information on this topic or other Financial Products, contact us via email, at 1-800-419-3723 or visit our website
Who should invest in Flow-Through Shares?
Typically, Investors in the top marginal tax bracket would receive the most benefit from a flow-through investment. However, most investors, regardless of their income level, would likely receive some benefit from investing in flow-through shares.
Investors should also be comfortable with risk and volatility in the value of their investment. Due to the highly speculative nature of resource exploration, the value of the investment could vary widely.
What am I investing in?
An investment in a Flow-Through Share is required to be used for the exploration and / or development towards production and must be kept separate from general operating funds. After the tax deductions are made, capital gains are possible. Some shares even allow for conversion into other investments.
What are the tax advantages?
If you were to invest $10,000 in flow through shares, providing that they are eligible for the tax breaks, you can claim the full $10,000 on your tax return. If you are in the 40% tax bracket, that would equate to a $4,000 tax return for that year.
What are the risks/disadvantages?
If you are experienced with the Canadian mining/oil sector, you will know that this market can be fairly volatile. Also, when you purchase flow through shares, you typically have to hold onto them for 18-24 months before you can sell them.
What is a flow-through limited partnership?
A flow-through limited partnership is a portfolio of flow-through shares of Canadian resource companies that combines unique tax advantages with the prospect for capital appreciation.
Early-stage oil and gas, or mining exploration companies receive special tax deductions that can be transferred, in the form of flow-through shares, to investors. Flow-through limited partnerships purchase flow-through shares and investors in the limited partnerships receive a 100 per cent tax deduction for the amount invested. Typically, after a period of 18 to 24 months, assets of the limited partnership roll over tax-deferred to units of a resource-based mutual fund
Who can benefit from flow-through limited partnerships?
• Individuals seeking an investment tax shelter to reduce current taxable income
• Investors who wish to reduce risk through a diversified portfolio, instead of investing in flow- through shares of a single company
• Investors who wish to defer tax and convert fully taxable income in the current year into capital gains taxed at a later date
• Individuals looking to invest with a proven, disciplined investment management team.
For more information on this topic or other Financial Products, contact us via email, at 1-800-419-3723 or visit our website
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