Flow-through shares are similar to common shares with the addition of tax benefits attached. They are issued by Canadian companies to finance mining, oil & gas exploration or development and some alternative energy projects. In exchange for an investor’s capital the resource company “flows-through” the tax deductions it may receive on qualifying exploration and development expenses.

This is a tax-advantaged investment in a basket of flow-through shares issued by junior to mid size resource companies involved in exploration, development and production within Canada. Risk is reduced by the tax benefits, professional management and in holding a diversified basket of resource companies. These investments are available either by prospectus or offering memorandum.

Refer to our Flow-through 101 page for a full explanation.

The benefits of a Flow-Through Limited Partnership is having a professionally managed portfolio of flow-through shares from a diversified pool of companies. As well as having access to flow-through share offerings that are not available to the general public.

The management team purchases shares of resource companies. The funds from flow-through shares are used by resource-based companies to explore new deposits and develop existing properties towards production.

The invested resource-based company determines which of their expenses qualifies as CEE. CEE can vary by company. These tax deductions are renounced by the resource company and flow-through to the Limited Partnership. Investors, who are the limited partners, receive the applicable income tax deductions associated with flow-through shares on their T5013A tax form and Relevé 15 (for Québec residents only).

Yes. The flow-through share program was first introduced by the Federal Government in 1954 to promote exploration and production in Canada's natural resource sector, but was only available between corporations. Since 1972, the Tax Act has allowed exploration companies to transfer or flow-through specific types of exploration expenses on Canadian properties to individual investors.

Refer to our Who Can Invest? page for a full explanation.

Individuals can invest in flow-through limited partnerships or mutual funds through their investment advisor or broker.

As with most investments there are risks to consider before investing, refer to the prospectus or offering memorandum for a full list of risk factors to consider. However, a significant aspect that limits the downside risk for Limited Partners is the combined tax deductions and tax credits (only on Mining Flow-through), depending on province of residence, These tax benefits reduce the net at-risk capital amount for Limited Partners.

There is typically a minimum amount an individual or corporation can invest but there is no maximum restriction, although an individual should have an advisor/broker assess their financial situation to avoid triggering Alternative Minimum Tax (AMT). Something to keep in mind is that each Limited Partnership has a maximum offering size and therefore is available only for a limited time to invest in.

No. Investors are Limited Partners and cannot be asked to contribute more than their original investment.

When our flow-through limited partnerships are dissolved the assets are rolled over or exchanged on a tax-deferred basis for redeemable shares in Marquest Mutual Funds Inc. At this point, an investor may choose to do one of the following: hold their shares as an investment, transfer some or all of their shares into their self-directed RRSP, redeem some or all of their shares and incur a capital gain, donate some or all of their shares to a qualified Canadian charitable organization or foundation and receive a donation tax credit, switch some or all of their shares into any other four funds in Marquest Mutual Funds Inc. without incurring a taxable consequence or a combination of the above.

The ACB of a share is what the CRA deems your cost of investment to be for tax purposes after the tax deductions allowed. The ACB from flow-through shares will be nil (or close to nil), as the tax benefits will approximately equal your original investment amount. ACB is determined only after dissolution of a limited partnership and is required in order to determine the capital gain (loss) for the tax year during which the mutual fund shares received after the dissolution of the LP will have been redeemed.

A T5013A tax slip, and a Relevé 15 for Québec residents only, will be mailed on or before March 31^st usually through your advisor/broker. These slips contain the applicable income tax deductions associated with the flow-through shares for the tax year in which you made the investment. For residents of Saskatchewan, a separate SK-METC slip will be sent if Saskatchewan tax credits apply.
The second year after investment, Limited Partners may receive another T5013A tax slip (and Relevé 15) with any interest, dividend, capital gain income or additional tax deductions.

We have developed a Tax Guide to assist investors in claiming their deductions. Request a copy from your advisor/broker.

Yes. A Limited Partner may use investment losses from previous years to shelter any capital gains from your investment.

The advantage is in receiving a 100% tax deduction when you invest in a flow-through LP and then after it is rolled over into a mutual fund you will receive a donation tax credit by donating the mutual fund units to a registered charitable organization or foundation.

Corporations can reduce their taxable income with the tax deductions available with Flow-through Limited Partnerships but unlike individuals cannot claim tax credits. A Flow-through Limited Partnership is most beneficial for a corporation that has capital losses, since they can be used to offset any capital gains on the proceeds of a Limited Partnership roll over. Another benefit is to apply half of the capital gain to increase a corporation's capital dividend account which could be paid out as a tax-free dividend to Canadian resident shareholders. Consult a qualified investment advisor/broker to learn about other ways a corporation may benefit from this investment.

They are very similar but the significant difference is that corporate class mutual funds are part of a special corporate entity that allows investors to switch assets out of one fund into another without incurring a tax liability. Taxes will apply, however, if an investor sells a portion or all of their holdings for cash. The tax advantages of corporate class funds are most beneficial when held outside registered accounts.

This is the current market value of a fund's share or unit. It is calculated daily (for mutual funds) or weekly (for flow-through funds) by taking the fund's total assets (eg. securities, cash, any accrued earnings) subtracting liabilities and dividing the remainder by the number of outstanding shares or units.