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.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
