BMO Nesbitt Burns
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Tax management using flow-through shares
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.