One structure. Less tax for high earners, corporations and donors.
A deduction against income you’ve already earned, personally or through your CCPC, plus tax credits on personal subscriptions. The shares are bought and resold moments apart on the same day, so the buyer carries the share-price risk.
If the deduction the issuer passed to you is reduced, the issuer must pay you an amount equal to the resulting tax. How the indemnity works →
No obligation. I explain and plan, WCPD handles the transaction, and your accountant is welcome to take part.
Three ways to buy flow-through shares. Only one of them removes your share-price risk.
All three can produce the same kind of tax deduction and credits. The difference is how long you hold the shares, and what the share price does while you wait.
Same day flow-through is the only structure we offer. The other two are shown for comparison only.
Individuals
You’re a high earner and pay tax at the top marginal rate on employment, investment and/or business income.
The structure reduces the tax you pay this year, against income you’ve already earned.
Over and above the deduction, every personal offering I work with also carries a tax credit. A credit reduces your tax directly; a deduction reduces your taxable income. It’s 15% for most mineral exploration, and 30% when the company is exploring for critical minerals such as lithium, graphite, nickel and cobalt.
Corporations
You own a Canadian-controlled private corporation, and getting money out of it is expensive. CCPC Shareholders face high combined corporate and personal rates on distributed profits. The structure gives shareholders a way to access corporate funds at a significantly lower after-tax cost.
IDEAL FOR
- Holdcos where passive investment income is generally taxed at the highest corporate rates
- Opcos with income above the small business deduction limit, taxed at the general corporate rate
- Corporations sitting on significant passive income, investment portfolios or surplus cash
- Owners looking for a more tax-efficient way to move corporate capital into their own hands
Philanthropy
You already give. For most people the only thing limiting how much is what it costs.
The standard charitable tax credit has most donors out of pocket roughly 50 cents per dollar donated. In certain cases, with enough capital available up front, the net cost of donating a dollar can come down to as low as one penny.
The charity receives the same gift either way. What changes is what it costs you.
Or, turn it around and the same out of pocket money can fund a much larger gift.
The surprise tax bill your RRSP or RRIF will trigger.
When you die, your RRSP or RRIF is generally taxed as if you cashed it in on your last day. If it passes to a spouse or partner, that tax is deferred until their death, but it doesn’t go away. A large balance can push that final return into the top tax bracket, where roughly half goes to the government.
That’s not a risk. It’s how the rules work. And you can plan for it.
The Estate Tax Shield (sometimes referred to as a RRIF meltdown) uses a structured flow-through transaction to move that future tax bill forward into a planned, tax-efficient withdrawal today. Same registered money. Meaningfully less tax paid.
If you’re an older individual with a substantial RRSP or RRIF balance you don’t need to fund your lifestyle, this is worth a conversation.
Structured flow-through transactions, in use in Canada since 2006
The risk that doesn’t go away.
The structure passes the share-price and illiquidity risk to the buyer. Issuer risk remains, but it’s limited.
The mining company raising the money has to spend it on eligible exploration expenses, generally by December 31 of the year after the shares are issued. If it doesn’t, the tax benefits can be reduced or denied, in part or in whole.
That’s the real risk, and it’s why WCPD carries out thorough due diligence on the issuer’s finances before any transaction proceeds. There’s a second safeguard in the paperwork: if your deduction is reduced, the subscription documents require the issuer to pay you an amount equal to the resulting tax.
I found this because I needed it for myself.
I spent thirty years as an investment and insurance advisor. Sold the business in 2017 and the sale left me with a substantial tax bill.
That’s how I found this. A structured transaction using flow-through shares. It solved my own problem first, before I ever thought about helping anyone else with theirs.
Now I do it for other people. Accredited investors paying too much tax, business owners with money trapped inside a corporation, philanthropically generous individuals and registered charities whose donors would give more if giving cost less.
What colleagues say about Ken
"When Ken first contacted me, I was skeptical because my past experience with flow-throughs involved the limited partnership structure. As soon as I had a chance to see how things could be arranged using bought deals, I was hooked. Way simpler and way more certainty."
"Ken has a rare ability to take a complex tax strategy and Fisher-Price it — plain language, clear steps, easy to execute. That’s why I never hesitate sending people his way."
"Ken and I have known and worked together for more than 30 years. He has a rare ability to explain complex tax and charitable-planning ideas in a clear, practical way. Just as importantly, Ken never loses sight of the people and charitable goals behind the planning. He genuinely cares about helping clients make informed decisions and create a greater impact with their giving."
"It has been my pleasure to know Ken Stern and to call him friend for over 20 years. I met Ken during my years working with a highly respected actuarial consulting firm. Ken has always enjoyed analyzing what some would consider to be complicated or complex financial structures and then making them understandable to his clients. His intelligence and caring is on display when it comes to the area of Flow Through Shares. That structure has changed dramatically since my time as a Financial Advisor, and in the right circumstances and for the right clients they really make sense. They provide the tax relief to entrepreneurs, professionals and affluent individuals who are challenged daily by our unfortunate tax system.
Ken is a man of true gravitas. A dedicated father, grandfather and husband who has travelled extensively and has a life experience that shows every day in his work. Ken understands that his work helps better the economic circumstances of individuals, families, communities and businesses alike. He is on the forefront of new intelligent and timely financial products showing his dedication to hard work and an unwavering ethical code."
Testimonials reflect the personal views of the individuals quoted. They are not investment advice, and they do not indicate or guarantee any tax outcome or investment result.
Recent conversations
All videos →Estate Tax Shield - Don’t let the CRA take more than necessary!
The magnifying power of Flow through shares
Philanthropy Friday - How Flow-through shares enhance donations; Ken Stern & Peter Nicholson
Start with the Primer.
A guide to the tax benefits and mechanics of flow-through shares. One transaction, completely outlined, start to finish. It answers much of what people ask me at the start of their investigation.
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If you’d rather I speak with your accountant first, send them the For Accountants page. I’m happy to take it from there.
