Flow-through Shares
British Columbia (BC) Flow-through shares are a non-refundable tax credit for qualifying investments made in new BC mineral exploration and are in addition to federal tax credits.
British Columbia's investment Advantage:
The BC flow-through share tax credits are harmonized with federal tax credits to provide huge tax saving and credits and investment advantages. For taxpayers in BC, the net cost of a $1,000 investment in mining flow-through shares can be as low as $383.
| Investment into | This amount comes directly off | How to obtain the deduction | ||
| Flow-through Shares | $ 1,000.00 | your taxable income | ||
| Federal (Fed) Tax Rate | 29% | -290.00 | Fed. drop in taxes owing | $1,000 (invested) x Fed. Tax Rate of 29% |
| Provincial (Prov) Tax Rate | 14.70% | -147.00 | Prov. drop in taxes owing | $1,000 (invested) x Prov. Tax Rate of 14.7% |
| Combined Fed/Prov Tax Rate | 43.7% | |||
| Fed. Tax Credit | 15% | -120.00 | Incentive from the government | $1000 (invested) less 20% prov. tax credit = |
| Slated to end March 2007 | for investing | $800 x federal tax credit of 15% | ||
| Prov. Tax Credit | -200.00 | $1000 (invested) x provincial tax credit of 20% | ||
| Slated to end March 2008 | ||||
| The tax credits would be taxable income in the next calendar year | ||||
| Income Tax on Fed. Tax Credit | 52.44 | Tax on Incentive | $120 dollar tax credit x combined fed./ prov. tax rate of 43.7% | |
| Income Tax on Prov. Tax Credit | 87.40 | Tax on Incentive | $200 dollar tax credit x combined fed./ prov. tax rate of 43.7% | |
| -617.16 | ||||
| Actual Cost to the Investor | $ 382.84 |
NOTE: Income made from flow-through shares becomes Capital Gains. The portion of Capital gain realized during the year that is required to be included in income. This is equal to one half (1/2) of the net capital gain. If a share is bought at $26 and sold at $30, there is a capital gain of $4. The taxable capital gain is one half of this amount, or $2. This is the amount that is included in income.
If the same amount of money were put into RRSP's the actual cost to the investor would be $563 for every $1000. If an RRSP was to be cashed in the entire amount of the withdrawal would be taxable.
For more information please contact: Richfield Ventures Corp. 242 Reid St. Quesnel, BC Tel: (250) 992-6644 and or, Ministry of Provincial Revenue, Income Taxation Branch Victoria, BC Tel: (250) 387-5754 www.rev.gov.bc.ca/itb or www.rev.gov.bc.ca/em
