For “grass-roots exploration expenses” incurred in respect of surface exploration (and are not associated with an underground exploration program), a super flow-through share (SFTS) provides an investor with the 100% deduction for exploration costs renounced by a Public Business Corporation (PBC), plus an additional 15% non-refundable federal investment tax credit (ITC) that can reduce the individual’s taxes payable. Provincial tax credits (such as those in British Columbia, Manitoba, Ontario, Quebec and Saskatchewan) may also be available.
A ‘Super’ Flow Through Structure Includes:
- 100% CEE (Canadian Exploration Expense)
- 15% non-refundable Federal Tax Credit
- 20% non-refundable BC Provincial Tax Credit
The B.C. mining flow-through share (B.C. MFTS) tax credit allows BC Residents who invest in flow-through shares to claim a provincial non-refundable tax credit of 20% of their B.C. flow-through mining expenditures. B.C. flow-through mining expenditures are specific exploration expenses incurred by a PBC and renounced by a corporation issuing the flow-through shares.
The Ministry of Finance urges investors to talk with a qualified advisor before buying any flow-through shares, as the tax considerations associated with these investments can be complicated.