Flow through shares for Natural Gas exploration (Quebec, Canada)
Last modified on February 12, 2015.
|Applies to States or Provinces||Quebec;Quebec|
|Name||Flow through shares for Natural Gas exploration (Quebec, Canada)|
|Policy Category||Financial Incentive|
|Policy Type||Corporate Tax Incentive|
|Affected Technologies||Natural Gas|
|Funding Source||Government of Quebec|
A flow-through share is a security issued by an exploration company that waives its exploration deduction in favor of the investor. The Québec Taxation Act enables a private individual to benefit from a significant tax deduction when calculating his or her taxable income. In fact, the Québec system provides for a basic deduction equal to 100 percent of the cost of the flow-through shares. For shares acquired after March 30, 2004 the individual may deduct an additional 25% when exploration costs are incurred in Québec by a non-operating corporation. A further 25% deduction is offered when work begins with surface explorations, for a total deduction of 150% of investment costs. When a flow-through share is sold, the investor may benefit an exemption of the deemed capital gain in other words the portion of the sale price between the purchase price of the shares and their adjusted cost base, which is zero. He can also deduct certain issue expenses that have been foregone in his favor, and this, over a period of five years.
|Department||Revenu Quebec, Resources Naturalles Quebec|