Canadians have very few tax breaks left. Investing in “flow through” shares offers significant tax savings to help out our energy and mining industries with a charity kicker. This is a rare win, win, win opportunity.
Here’s how it works. Let say a high income earning Canadian invests $100,000 in flow-through shares today. The issuing company uses the funds for exploration, but cannot use the associated tax deductions, so renounces them, or flows them through to investors; hence, the name flow-through shares. The investor then deducts 100% of his/her cost against income for tax purposes, resulting in about $46,000 in tax savings. Lower taxes also mean reduced tax installments for the following year.
.jpg "What does your shareholders agreement say?")
Glenn is an expert in shareholders agreements, specifically the components that spell out what is to occur in the event of a shareholder’s death or disability. What was clear from his presentation is that there are a lot of poorly drafted agreements out there that are a potential liability to the business.
