Question: How do you buy flow through shares?

How do I invest in flow-through shares?

The flow-through shares can be purchased directly from a resource company, or from a limited partnership (LP). The LP then invests in resource companies, which provides the investor some diversification.

How does flow-through shares work?

Flow-through shares are a financing tool available to a Canadian resource company that allows it to issue new equity (shares) to investors at a higher price than it would receive for “normal” shares, thereby assisting it in raising money for exploration and development. … This reduces the investor’s Canadian taxes.

Can companies buy flow-through shares?

Can Corporations benefit from buying flow-through? Yes, corporations have the same advantages buying flow-through as does the individual investor.

Is flow-through shares good?

On a personal income tax basis, flow-through exploration expenses can be deducted against all sources of income on your tax return. Most importantly, the Canada Revenue Agency (“CRA”) condones flow-through investments both as public and income tax policy. Flow-through share are a great way for individuals to save tax.

What are flow through common shares?

Flow Through Shares are a special issue of common shares where the tax deductions are issued to the original investors and then become regular common shares after the tax deduction is completed. Corporations that issue FTS typically generate Canadian Exploration Expense (CEE) which is a 100% deduction against income.

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What is a Flow Through LP?

A flow-through limited partnership is an equity investment in a portfolio of flow-through shares of Canadian resource companies that combines unique tax advantages with the prospect for capital appreciation. … This vehicle allows investors to defer and reduce tax.

What is a flow through product?

“Product Flow includes movement of goods from supplier to consumer (internal as well as external), as well as dealing with customer service needs such as input materials or consumables or services like housekeeping. Product flow also involves returns/rejections (Reverse Flow).”

What does flow through mean?

A flow-through (pass-through) entity is a legal business entity that passes all its income on to the owners or investors of the business. … With flow-through entities, the income is taxed only at the owner’s individual tax rate for ordinary income: The business itself pays no corporate tax.

What is flow through funding?

A flow-through share (FTS) is a tax-based financing incentive that is available to, among others, the mining sector. … The corporation “renounces” to the taxpayer an amount in respect of the expenditures so that the exploration and development expenses are considered to be the taxpayer’s expenses for tax purposes.

How do you calculate flow rate?

Flow-through determines what percentage of incremental revenue results in incremental profit. Flow-through = (Current period revenue – Previous period revenue) / (Current period operating profit – previous period operating profit).

What special rule applies to the ACB of flow through shares?

It’s important to note that the adjusted cost base (ACB) of a flow- through share is deemed to be zero. This means that when you eventually sell your shares, the sale proceeds will be taxed as a capital gain.

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What is flow through units?

Flow-Through Units means the 1,200,000 units of the Purchaser to be issued pursuant to the Private Placement at a purchase price of $0.50 per unit, wherein each Flow Through Unit shall be comprised of one (1) Flow Through Share and one (1) Warrant; (t)

What is CEE and CDE?

Canadian resource companies are permitted to fully deduct specific exploration and development expenses, known as Canadian Exploration Expense (CEE) and Canadian Development Expense (CDE).