RE:RE:Issues are Drag Net on the Share Price Yeah, I quess you are correct if.
MTO gets out good drill news along with the Q4 and the annual report before the flow through shares become available. These events are in MTO control. What is not is the permit process for the mill and the mine at Barry. I would be prepared for a meager pump thena huge dump in Mid October.
Wait for it then take profits off the table folks.
Here’s how it works:
Let’s pretend you bought $10K worth of flow through shares. So assuming you make the big bucks, your Marginal Tax Bracket is 43.7%.
When you get your tax refund- if you work as an employee, you will get $4370 back, meaning you will have tax savings of $4370.
This works by multiplying $10,000 x 43.7%= $4370.
(It’s just like an RRSP- whatever you contribute, you get a tax savings of your marginal tax bracket)
However, there’s a catch.
When you sell your flow through shares- let’s assume for simplicity’s sake that you neither make nor lose money on the $10,000 you invested, the adjusted cost base is $0- so the capital gain is considered $10,000.
So that tax you would have to pay when you sell is:
$10,000/2=$5000x 43.7%=$2185.
So you got $4370 back from the government, but when you sell, you have to pay a capital gains tax of $2185. Therefore, the net income advantage is $2185.