The British Columbia Government’s September 1, 2009 budget update has extended the BC mining flow-through share (“BC MFTS”) tax credit that was originally scheduled to expire on December 31, 2009 to December 31, 2010.
The BC MFTS scheme provides that individuals who invest in flow-through shares, offered by a corporation conducting mining exploration in British Columbia may qualify to claim a non-refundable British Columbia income tax credit equal to 20% (30% in Mountain Pine Beetle affected areas) of the BC flow-through mining expenditures that are transferred to the individual in a given year. The cumulative effect of the BC MFTS, when combined with a similar federal tax credit, is that a $1,000 investment is reduced to approximately $383.
A BC MFTS tax credit can not be claimed for more than the individual’s British Columbia income tax payable for the year, but any unused credit may be carried forward 10 years, or back three years.
To claim the BC MFTS tax credit, the taxpayer must complete the Canada Revenue Agency’s (“CRA”) T1231 tax credit application form and send it to the CRA along with the information slip that the taxpayer received from the corporation at the time of the investment and the T1 income tax form for the year in which eligible exploration expenses were transferred to the taxpayer. Additional information about the BC MFTS tax credit can be found at www.sbr.gov.bc.ca/individuals/Income_Taxes/Personal_Income_Tax/pit.htm or on the CRA’s website at www.cra-arc.gc.ca/formspubs/tpcs/fts-paa-eng.html.
If you have questions about flow through shares, contact any member of Clark Wilson LLP’s Corporate Finance & Securities Group.