Tax Planning Benefits & Options

There are several ways that investments in Flow-Through Limited Partnerships can be leveraged in tax planning. Investors should always consult with their tax professional to ensure that any strategy is appropriate for their unique situation.

The entire amount invested in a Cordillera Minerals Flow-Through Limited Partnership may be tax deductible in the year purchased (subject to certain assumptions, outlined in the Offering Memorandum). When the Flow-Through Limited Partnership terminates, the shares are taxable as capital gains when the Investor decides to sell the shares or contribute the shares into an RRSP for additional tax savings. This means you would only pay taxes on half of the total amount at your marginal tax rate (please note that marginal tax rates differ by province).

EXAMPLE:
Please see the illustration provided below for potential tax benefits for investors in BC, AB, SK, MB & ON with regards to a $25,000 investment example, based upon the following assumptions:

1. The Limited Partnership invests 70% of its available capital in BC-based junior mineral resource companies.
2. The investors (Limited Partner) are taxed at the highest marginal tax rate in each province they reside in, IE: for a BC resident (53.50%)
3. he net tax benefits and tax credits are potentially realized as per example below;

Investing in flow-through shares effectively converts income into capital gains, allowing investors to take advantage of any capital loss carry-forwards.
Example: An investor buys $25,000 of Cordilleran Minerals Flow-Through L.P. and deducts 100% of the investment against personal income. Upon termination of the Flow-Through L.P. and the LP Liquidity Event, where the Investor directly receives their pro-rata share of the various Partnership Portfolio’s securities, the investor may choose to sell all of their individual Mineral Issuer shares. In this example, we are assuming that the investor also has $25,000 of unused capital losses, which he may now use to offset the capital gains incurred from the disposition of the Mineral Issuer Shares, further enhancing the after-tax returns.

Investors investing in Cordillera Minerals Flow-Through Share Limited Partnerships will receive their tax deductions in the year they invest and then receive their pro-rata shares of the various Mineral Issuers from the Partnership’s liquidity event in 12 months or less. The Investors may then choose to contribute their various Mineral Issuer Shares into their RSP for a 2nd tax deduction.

A BC Resident investing in a Cordillera Minerals Flow-Through Limited Partnership at a 53.50% MTR would receive approximately $16,115 in net tax savings in year 1, and then if they contribute their pro-rata share of Mineral Issuer securities to their RSP in year 2, an additional $5,885 in potential tax benefits. *This illustration assumes the net value of the various Mineral Issuer Shares purchased in the LP Portfolio is at $22,000 at time of liquidity and distribution of the securities.

Allow for tax sheltered capital appreciation of the portfolio of Mineral Issuer Shares.*
*Share will be subject to capital gains tax as CRA views the contribution as a ‘deemed disposition’.

By liquidating your previous portfolio of Mineral Issuer Shares and re-investing in a new Cordillera Minerals Flow-Through Limited Partnership an Investor would receive an additional tax deduction through investment in a new flow-through limited partnership.

*Share will be subject to capital gains tax as CRA views the contribution as a ‘deemed disposition’.