Flow-through shares were enacted by the Federal Government of Canada back in 1954 as a means of encouraging investment into exploration for natural resources. Today, flow-through shares issued by oil & gas, mining or renewable energy companies are one of the last legitimate tax-assisted investments available to Canadian resident investors (both individual and corporate) and represent an attractive investment planning opportunity.

Flow-through shares are common shares like any other common share issued and outstanding in a company, except they provide tax benefits to the purchaser. A flow-through share is available to mining, petroleum and certain types of renewable energy companies to facilitate financing exploration and project development activities. In return for receiving these funds, the resource company has the obligation to “flow-through” to the purchaser of the flow-through share the tax deductions it receives upon spending the funds on qualifying exploration and development activities. Except for the initial tax benefits, flow-through shares are indistinguishable from all other common shares of a company.