Tax Minimization

Tax deductions and credits, normally available only to a corporation, may flow through to owners of the corporation's flow-through shares. Canadian exploration and mining companies are able to issue such shares at a premium because investors are considered to be funding exploration and development costs and are therefore entitled to deduct these expenses from all other income.

Typically, a flow-through share has the following characteristics: 100% tax deductibility; typically, a flow-through share must be held for a period of four months; and an agreement that covers the resource company's obligations to ensure the expenditures are made in accordance with the Canadian Income Tax Act.