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  • Tag: Shareholder Agreement

    Flow through shares – A win, win, win

    Canadians have very few tax breaks left. Investing in “flow through” shares offers significant tax savings to help out our energy and mining industries with a charity kicker. This is a rare win, win, win opportunity.

    Here’s how it works. Let say a high income earning Canadian invests $100,000 in flow-through shares today. The issuing company uses the funds for exploration, but cannot use the associated tax deductions, so renounces them, or flows them through to investors; hence, the name flow-through shares. The investor then deducts 100% of his/her cost against income for tax purposes, resulting in about $46,000 in tax savings. Lower taxes also mean reduced tax installments for the following year.

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    What does your shareholder’s agreement say?

    Last week, we had a visit from Glenn Stephens, a lawyer and director of planning services for PPI Advisory, an insurance provider that we frequently work with to help our clients protect their assets and their income.

    i-b102687329fa9bc95650c50844b678c2-fineprint2(1).jpgGlenn is an expert in shareholders agreements, specifically the components that spell out what is to occur in the event of a shareholder’s death or disability. What was clear from his presentation is that there are a lot of poorly drafted agreements out there that are a potential liability to the business.

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