What is Flow-Through

The Canadian Government offers tax incentive programs to encourage exploration by Canadian natural resource companies. The legislation enables mining and oil and gas companies to issue flow-through shares on the grounds that the money raised through issuance is spent on exploration and development.

Flow-through shares are similar to common shares with the added benefit of income tax deduction credits. Canadian natural resource companies engaging in exploration and development projects can renounce the associated expenses as income tax deduction credits to investors who purchased their flow-through shares. 

After the standard two and a half year investment cycle, Flow-Through Limited Partnerships are wound-up. Partners typically exit the Limited Partnership by exchanging their units for mutual fund units.

For more information on how FTLPs work, please see our publications page for ‘How FTLPs work’