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ARTICLE · 23 DECEMBER 2020

Flow-Through Shares: Draft Legislation Released To Extend Expenditure Periods

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On December 16, 2020, the Department of Finance released draft legislation aimed at providing relief to resource companies that had issued (or will issue prior to the end of 2020)

CanadaCorporate/Commercial Law
Bennett Jones LLP
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On December 16, 2020, the Department of Finance released draft legislation aimed at providing relief to resource companies that had issued (or will issue prior to the end of 2020) "flow-through shares" (FTS) by extending the statutory time period by which such companies may incur qualifying expenditures. This legislation, which is consistent with the government's original announcement of such measures in July 2020, has been eagerly anticipated by an industry dependent on flow-through share financing but hampered this past year with shut-down or similar operational issues as a result of the COVID-19 pandemic.

Background 

FTS financing is extremely popular in Canada as a way for junior resource companies to raise capital at a premium to market prices in order to fund exploration and development activities. A FTS generally sells for a premium because the initial subscriber of the FTS is entitled to claim federal tax deductions up to the amount of the subscription

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