Reporting your investments

If you have invested in flow-through shares (FTSs) directly with a principal-business corporation (PBC), you will receive a Form T101, Statement of Resource Expenses.

If you have invested in FTSs indirectly through a partnership or a limited partnership, you will receive a Form T5013, Statement of Partnership Income.

Individuals (excluding trusts) as investors

Deducting resource expenses (line 22400)

You can deduct resource expenses on line 22400 of your individual income tax return (T1 return). Use Form T1229, Statement of Exploration and Development Expenses and Depletion Allowance, to calculate your deduction.

Taxable capital gains (line 12700)

For most investors, FTSs are capital property. In such cases, the capital gain on disposal of an FTS is generally the entire sale price since an FTS is deemed to have a cost of zero when purchased. Even if no expenses have been renounced, the cost is still zero. See the General Income Tax and Benefit Guide and the Capital Gains guide for details on how to report your taxable capital gain.

Investment tax credit (ITC) (line 41200)

You may be eligible for this credit if you have an amount:

  • shown in box 128 of Form T5013A, Statement of Partnership Income for Tax Shelters and Renounced Resource Expenses; or
  • shown in box 128 of Form T101, Statement of Resource Expenses.

Use Form T2038(IND), Investment Tax Credit (Individuals), to calculate your credit. For more information, see the Information Sheet attached to Form T2038(IND).

In order to claim a credit, send a completed Form T2038(IND) to the CRA no later than 12 months after the filing due date of your return for the year in which the credit was earned.

Provincial tax credit

You may be eligible for this credit if you have an amount shown in box 141, 144, or 145 of your Form T5013A, Statement of Partnership Income for Tax Shelters and Renounced Resource Expenses, and/or Form T101, Statement of Resource Expenses.

Partnerships as investors

A partnership that invested in FTSs cannot deduct from its income the amount of resource expenses renounced to it. The deduction must be taken at the "partner" level.

A partnership must file Form T5013sch52, Summary Information for Partnerships That Allocated Renounced Resource Expenses to Their Members, with Form T5013SUM, Partnership Information Return, if it has invested in FTSs. The total of the amounts renounced to the partnership is then allocated to its members. See T4068, Guide for the Partnership Information Return, for additional information on partnerships.

Corporations as investors

A corporation may invest in the FTSs of a PBC. Where the investor corporation is itself a PBC and is related to the issuer of the FTSs, it can in turn, renounce those expenses that were renounced to it. An investor corporation that is not related to the PBC cannot renounce those expenses.

Renounced expenses are reported as an addition to the expenditure pools on Form T2SCH12, Resource-Related Deductions, when the corporation files its corporate tax return (T2 return). The corporation cannot claim expenses renounced to it, if it in turn renounced those expenses.

A corporation is not eligible to claim the federal investment tax credit or the provincial tax credits related to the FTS program.

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