flow-through share (action accréditive).

A flow-through share is available to mining, petroleum and certain types of renewable energy companies to facilitate financing their exploration and project development activities. Eligible companies issue these equity shares to new investors. Investors receive an equity interest in the company and income tax deductions associated with new expenditures incurred by the company on exploration and development. Flow-through shares are available to selected companies but are of greater benefit to non-taxpaying junior companies. These companies are often unable to use income tax deductions against their corporate income and are willing to forgo the deduction to new investors. For more information, visit the Canada Revenue Agency Flow-through Share (FTS) Program Web page.

 

Flow-through Shares are 100% tax-deductible investments in Canadian mining companies - for example, if you have a taxable income of $100,000 and you invest $10,000 in Flow-Through Shares, you reduce your taxable income to $90,000 (for both federal and provincial taxes). In addition, investors get a 15% federal tax credit that further reduces your taxes.

There are also provincial tax credits. For example, if the company is working in BC and you are a resident of BC, you also get a 20% provincial tax credit. As a result, an investment of $10,000 in super flow-through shares has a net cost of $3,830 provided the investor is in the highest individual tax bracket. Similar provincial tax credits are also available to residents in Saskatchewan, Manitoba and Ontario.

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