This is an important tax minimization strategy we often recommend for clients that earn themselves into a significantly high tax bracket. Here’s a simplified explanation:
Designated mining companies that need access to capital are allowed to issue new equity shares at a higher price than their normal shares.
Risk-tolerant investors purchase these shares, injecting much-needed financial strength into the resource sector.
In appreciation for their willingness to take on that risk and pay the premium price, the government rewards these investors with a 100% tax deduction in the year of purchase.
David B. Totten