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The little book of BIG TAX SAVINGS

One of the most powerful tax strategies explained in simple language.

Understand why the Government is giving over a Billion dollars of income tax deductions in 2011. Bernie Doyle
Disclaimer This, like all of our publications, is designed to provide authoritative information in regard to the subject matter covered. Although great effort has been made to provide accurate information, the author, and Pope & Company Ltd. assume no responsibility for errors, inaccuracies, omissions, or any inconsistencies herein. This document is not an offer to buy or sell any investments, or to hasten an individual to participate in any type of transaction. Always consult with an investment professional before making investment decisions.

Giving up 43-46% of your income is a painful task indeed. in fact it is a pain. Top income earners pay the majority of the nations income taxes 2 . With the cost of living going up. Paying Income Taxes is not enjoyable. being skilful in reducing income taxes is essential. If you want to grow your wealth. Their methods are available to everyone. The very wealthy know how to protect their money from unnecessary taxes and they do it legally.Income Taxes can be reduced legally if you know how. If you like to pay taxes then the following information will be of no use to you. Even though people go to great lengths to reduce or defer their taxes. But you don t have to. the only thing you need to do is make yourself aware of how to do it. But if you are interested in a legal and tested way to reduce your income tax then read on. One of the most powerful tax deductions available goes mostly unnoticed. tax strategies are more important today than ever before.

The Government gives 100% tax deductions.. The Global Economy is super competitive. Q.. The government loves to collect taxes.Here s the story. They are called Flow-through tax deductions. so why do they give these big tax deductions? A. For Canada to maintain its position we need to stimulate the industries where we can succeed. As a nation we have no choice but to strive to stay a world leader in these sectors. Anyone can get these tax deductions. When you participate in this stimulation ( Flow-through ) you get powerful tax deductions. Flow-through helps several Canadian industries stay at the forefront of the global economy. The Canadian Government has a very strong interest in maintaining a world leadership role in sectors like Natural Resources and Green Technologies. 3 . The tax deductions are part of the Flow-through program.

Either way. an investment is made into Flow-through eligible equities (shares)..* Flow-through shares can be bought for an individual exploration company. Next. the investor is then allowed to deduct the entire amount as non-taxable income in the same year as the investment. the entire amount invested is tax deductable. there is no guarantee of the price that the share can be sold for. Industries like the Natural Resources Sector. which has a diversity of different exploration companies. Or a basket of different companies can be bought. the Canadian Government offers very large tax deductions to stimulate industries that they want to see grow. much like a mutual fund.. First. At a later date the equities are sold and the investor gets their money back. Flow-through shares are usually speculative. The Canadian Government gives tax payers 100% tax deductions by channelling them through the industries that they want to see grow and flourish. 4 . In short.How it works. *The amount the investor receives for the sale of the equities is dependent on the market value of the equities.

Some Flow-through companies offer tax credits in addition to the 100% tax deduction which can total up to 120% for Ontario residents.How to get your tax deduction. The amount of the tax deduction depends on you and which Flow-through company you work with.. The tax deductions work against the income that you earned in the year you decided to participate. These are known as Super Flow-thoughs .. 5 . The tax deduction is entered into your T1 tax form on line number 224. The Flow-through industry follows the regulations set out the Canadian Revenue Agency. There are at least 25 different companies in Canada that focus on delivering Flow-through tax deductions to Canadian citizens. indicating the Canadian Exploration Expenses that are 100% deductable. It is still possible to get tax deductions for 2011.

6% Assumptions: 1. After Tax Return Return on Investment $770 .Adjusted Cost Base: The rules governing flow-through shares set out in the Income Tax Act (Canada) generally speaking. 3. the full proceeds of disposition are taxed as a capital gain.Tax savings assume total deduction of $1000 for every $1000 invested. you are taxed at a capital gains level (23%) instead of marginal tax rate (46%) and the difference between the two is where the return is made.Example: Tax Considerations and Calculations. In this example you bought for $1000 and sold for $1000. Sale Economics shows that upon redemption capital gains tax will be incurred. when a flow-through investment is sold.4259 x 100 = 42. provide that tax deductions associated with flow-through shares reduce the Adjusted Cost Base of a flow-through investment.6% can be realized on the buying and selling of a stock that has no change in value between the purchase and sale. As a result. 2. 6 . Fundamentally. This results in after tax proceeds of $770 for a $540 net cost.4259 % After Tax Return .$540 = $230 Divided by Investment $230/$540 =. In this simplified calculation an after tax return of 42. Purchase Economics shows that with Flow-through eligible shares it only costs you $540 to get $1000 worth of stock. Calculations use marginal tax rate of 46%. The Purchase and Sale Economics reveal the fundamental the tax advantages that the Canadian government is offering.

A history of over 50 years proves that it works in assisting industry as well as Canadian s who want tax deductions. 7 . Flow-through tax deductions are completely legal and have survived the test of time as a sound useful tax strategy for thousands of Canadians like you. the Flow-through program stimulates different industries that the Government wants to see grow and flourish. As mentioned before. It s similar to an RRSP contribution. The Government has granted many billions of dollars in tax deductions over the years to people who participate in the Flow-through program. The tax benefits of the Flow-through program are written specifically in provisions within the Income Tax Act.The History of Flow-through tax deductions Flow-through tax deductions have existed in one form or another since 1954.

M5J 1T1 8 . For a recommendation of which Flow-through company is right for you or for a free copy of the 12page booklet Flow-through investing simply call or email Bernie. one of the oldest member firms of the Toronto Stock Exchange. ON.com Pope & Company Ltd. In my opinion. Bernie Doyle 416-593-5546 bd@popecompany. If nothing else. 40 University Ave. Toronto.Bernie Doyle For years Bernie has worked to bring the most robust and flexible tax deductions to his clients. all tax payers should be aware of the tax advantages available to them from the Flowthrough program. Suite 420.. Bernie is an investment advisor with Pope & Company Ltd. the Flow-through program offers one of the best tax deduction and tax deferral opportunities for Canadians. For general questions please call or email.