Mining for tax breaks in mineral exploration

Flow-though shares offer lucrative deductions and tax credits to investors.

Matthew Elder 10 April, 2017 | 5:00PM

Tax breaks are a rare breed for most investors nowadays. But one that has endured is the deduction -- and, in some cases, a credit as well -- for investments in certain resource companies.

A tax deduction is available to investors who purchase flow-through shares of qualifying oil-and-gas and mining companies, which are permitted to pass on -- or "flow through" -- their tax expenses to shareholders. Up to 100% of a company's eligible exploration expenses may be deducted from the taxpayer's income, as well as up to 30% of eligible development expenses.

The shares must be newly issued, through either private placement or public listing, in order to qualify for flow-through tax treatment. These shares must be owned directly by an individual investor, or through a limited partnership that holds flow-through shares.

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Matthew Elder

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