As the world drives toward green technology, you’ve likely heard concerns about our ability to source the materials needed to fuel it – minerals like lithium for electric car batteries or copper for solar panels.
Dubbed critical minerals, these are the building blocks for the future of our green and digital economy, used in a wide range of essential products, from your mobile phone to medical equipment applications.
And Canada just happens to be one of the leaders in this sector – No. 3 after Russia and China. As world markets look to diversify the supply network and mitigate the risk of global supply chain disruption, the Canadian government has stablished a Critical Minerals Centre of Excellence to help supply the world with responsibly sourced products.
One of the ways it has done this in recent years is to encourage flow-through shares to junior mining companies.
Essentially, flow-through shares are a financial tool the government uses to raise capital for junior mining companies – like those aiming to search for and mine critical minerals. Investors receive a tax deduction equal to the amount invested, explains Peter Nicholson, President & Founder of Ottawa-based WCPD Inc., an exempt market dealer offering efficient financing for Canadian resource and mineral exploration since 2006.
When paired with Canada’s charitable donation tax rules, flow-through shares brings both the tax benefits and the opportunity to donate more to charity for less due to the increased tax savings.
Nicholson explains how it works:
- When a junior mining company plans to drill, WCPD’s clients purchase flow-through shares for the 100 per cent tax deduction and donate them to the charities of their choice.
- The shares are then sold to a pre-arranged liquidity provider at a discount a moment later, eliminating any stock market risk. The registered charity received the cash proceeds and issues a tax receipt to the donor, generating a second 100 per cent tax deduction.
- Alternatively, instead of donating the shares to charity, investors can simply retain the cash and make net returns usually greater than 20% because of the tax savings. But typically, individuals and businesses are looking at opportunities to maximize their philanthropic donations.
Flow-through shares themselves are nothing new; in fact, they’ve been around since 1954. They’ve not only generated billions in financing for junior mining companies, but more than $1 billion in giving to registered Canadian charities since 2006.
While the benefits for investors / donors largely fall to those with $225,000+ in taxable personal income (those in the 50 per cent tax bracket in B.C.), other opportunities currently exist for liquidity providers, who have the benefit of purchasing the stocks at a discount, because of the tax savings to the original purchaser.
Essential for our future
While some investors have been hesitant to contribute to mining for the perceived environmental concerns, the importance of minerals critical for a green future is changing that.
“We need to meet the surge in demand, or we won’t be able to get our electric cars on the road to meet our carbon targets,” Nicholson explains. “There’s a massive demand, not enough supply, and the world is looking to us.”
Additionally, investing in this sector brings jobs – especially for Indigenous people in Canada’s north.
As part of the Canadian government’s economic initiatives, it’s introduced an enhanced tax credit, where investments into explorations involving minerals such as copper, nickel, lithium and cobalt will now provide a 30 per cent tax credit – equal to a 60 per cent tax deduction, on top of the 100 per cent tax deductions from the flow-through structure, Nicholson notes.
While Canada’s major accounting firms are aware of the tax benefits of using flow-through shares with immediate liquidity providers, it’s new to some smaller firms and Nicholson invites queries from accountants and others wanting to learn more. And no, it does not create a red flag for Canada Revenue, as you have all the necessary receipts that support the government programs.
In the end, it’s the charities that benefit, with donors able to contribute more to the causes that matter to them, whether in health, social justice, the environment or the arts. “Revenue Canada has never thanked me for all the taxes I’ve paid over the years, but you’ll get lots of ‘thank yous’ from the charities you’re able to support,” Nicholson says.
Learn more at wcpd.com or contact Peter Nicholson in Ottawa, at 613-851-0417.
Your Weekend Reading: A Global Economy Awash With Mixed Signals – Bloomberg
Charting the Global Economy: OECD Raises Inflation Forecast – BNN Bloomberg
(Bloomberg) — Central banks around the world must be steadfast in their inflation fight even though economies will suffer as a result, the OECD said this week.
The organization boosted its 2023 inflation estimates and said it expects price increases the following year will remain above the targets set by many global central banks. While economies will slow because of tighter monetary policies, the OECD didn’t forecast a recession.
Though a survey of US manufacturers showed a fifth month of shrinking activity, another report indicated a healthy increase in business investment. A survey of the euro area businesses indicated that any downturn may not be severe as initially expected.
Meantime, the Bank of China eased reserve requirements for banks to help bolster the world’s second-largest economy.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:
The world’s central banks must keep raising interest rates to fight pervasive inflation, even as the global economy sinks into a significant slowdown, according to the OECD. The organization raised inflation projections for next year and said that while the global economy will suffer a “significant growth slowdown,” it’s not forecasting a recession.
This week saw more major rate hikes across the world, with 75 basis-point hikes in Sweden, New Zealand and South Africa and full percentage-point moves in Pakistan and Nigeria. Turkey went the opposite way, cutting rates by 150 basis points.
Business activity contracted for a fifth month in November as demand faltered, while inflationary pressures continued to slowly ease. The S&P Global flash composite purchasing managers’ index slid to the second-lowest level since the immediate aftermath of the pandemic.
Orders placed with US factories for business equipment rebounded in October, suggesting capital spending plans are holding up in the face of higher borrowing costs and broader economic uncertainty. Core capital goods shipments jumped the most since the start of the year, suggesting a solid start to fourth-quarter gross domestic product.
Euro-area businesses see tentative signs that the region’s economic slump may be easing as record inflation cools and expectations for future production improve. A gauge measuring activity in manufacturing and services unexpectedly rose in November, according to S&P Global.
Sweden’s home-price decline accelerated in October, as the Nordic country gripped by the most severe housing slump in three decades shows what may lie ahead for many other developed economies.
For the second time this year, China’s central bank cut the amount of cash lenders must hold in reserve, ramping up support for an economy racked by surging Covid cases and a continued property downturn. The People’s Bank of China reduced the reserve requirement ratio for most banks by 25 basis points.
Signs are growing in China that local government debt burdens are becoming unsustainable. China’s 31 provincial governments have a stockpile of outstanding bonds that’s close to the Ministry of Finance’s risk threshold of 120% of income. A major cause of the financial squeeze is the property crisis.
Australia has spent big to attract swathes of Indian tourists to its shores, signed a free-trade deal with post-Brexit Britain and uncovered new Middle East markets during its 30-month trade rift with China. Still, outside iron ore and other key commodities, there’s been substantial pain for exporters.
Chile is set to lead the world into a steep interest rate-cutting cycle next year as inflation slows and its economy goes from boom to bust, according to swap markets. Traders are forecasting more than 5 percentage points in cuts in the next 12 months after a surprise inflation print last month and as the economy teeters on the edge of recession.
Shipments of boats, vehicles and computer parts are leading Mexico’s export boom, showing growing US demand for industrial products from its southern neighbor. The export of boats produced in Mexico increased 266% in September compared to a year ago, the fastest-growing item among Mexican exports worth more than $100 million.
–With assistance from Maya Averbuch, Sebastian Boyd, Valentina Fuentes, Sybilla Gross, William Horobin, John Liu, Yujing Liu, Swati Pandey, Reade Pickert, Jana Randow, Niclas Rolander, Zoe Schneeweiss and Ben Westcott.
©2022 Bloomberg L.P.
Canada’s Best Credit Cards for 2023
Choosing the best credit card in Canada can get confusing. Not only are there so many options, but everyone has different goals, desires, and credit histories – all of which come into play when choosing a credit card. For example, parents with a large family would likely benefit from a credit card that has great cash-back rewards on groceries and gas while a digital nomad might enjoy points and comprehensive insurance from a card that rewards travel purchases.
However, rewards aren’t the only thing to consider. You should also take into account the annual percentage rate (APR), annual fee, and welcome bonuses. To help you decide which is Canada’s best credit card for 2023, we’ve broken them down by category and included all the important details.
Best Credit Cards in Canada 2023
No matter your financial situation or goals, there is a credit card out there for you. Here’s a breakdown of Canada’s best credit cards in 2023:
Best Cash Back Credit Card
- Welcome bonus: $200
- Annual fee: $120 after the first year
- Regular APR: 20.99% – 24.99% (variable)
This card gives you 10% cash back on $2,500 in purchases over the first four billing cycles. Additionally, you can earn 4% cash back on groceries and gas, 2% cash back on dining, transportation, and recurring bills, and 1% cash back on all other purchases.
Best Travel Credit Card
- Welcome bonus: 2,500 Membership Rewards points
- Annual fee: $155.88 ($12.99 per month)
- Regular APR: 20.99%
You can earn 2 American Express Membership Rewards per dollar spent on travel or gas, and 3 points per dollar on travel bookings made through the Amex Travel Portal. This card also comes with travel insurance coverage and a $100 USD hotel credit.
Best Business Credit Card
- Welcome bonus: 60,000 Aeroplan Points
- Annual fee: $120 (rebated in the first year)
- Regular APR: 19.99%
This is the best credit card in Canada for anyone that travels for business. This card offers annual earnings of $456.68 when you book Air Canada and $430.63 in value when you book other any travel, including non-Air Canada flights, cruise lines, rental car companies, and tour companies. You can also benefit from a Buddy Pass to anywhere Air Canada flies in North America, including Hawaii and Mexico.
Best Credit Card for Bad Credit
- Welcome bonus: None
- Annual fee: None
- Regular APR: None
This card is almost a credit/debit card hybrid, and an excellent option for anyone with bad or no credit. The card is loaded with money from your bank account or a direct deposit paycheque. It can be used as a debit card for free, or you can request to open a line of credit to work on building or repairing your credit. If you choose to open a line of credit, there is a $10 per month fee.
These are only a few of the best credit cards in Canada for 2023. Give them a try next year and see if your choice helps improve your financial situation!
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