RE:RE:RE:share price vs pkacementphiloex wrote:
Tax? 40% tax credit for something?
philoex, you should make yourself familiar with "flow-through" share implications:
How Flow Through Shares Work!
As it is tax season, it feels appropriate to talk about tax strategies. There are very few tax breaks for Canadians, however, there are still some remaining. One of these tax breaks is to invest in “flow through” shares.
What are Flow Through Shares?
These shares are issued by oil and mineral exploration companies who pass the tax breaks for exploration onto investors.
What are the tax advantages?
If you were to invest $10,000 in flow through shares, providing that they are eligible for the tax breaks, you can claim the full $10,000 on your tax return. If you are in the 40% tax bracket, that would equate to a $4,000 tax return for that year.
How does it work?
As stated above, you get to claim the FULL amount invested against your income. However, when you sell, your adjusted cost base (ACB) is set to $0, ie. whatever you sell for is your PROFIT.
If you were to invest $10,000, and sell 2 years later for $10,000, your profit would be considered $10,000. So to calculate your capital gains, with a 40% tax rate, would be $5000 x 40% = $2000 tax payable. Even in the scenario where the shares don’t change in price, you will receive a $2000 gain ($4000 tax return – $2000 tax payable).
Read more at https://www.milliondollarjourney.com/how-flow-through-shares-work.htm#2MkHu51HbPw5A0IX.99
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