Flow-through share (“FTS”) offerings continue to keep practitioners busy. The workload of practitioners has increased, particularly because of several recent Canada Revenue Agency (“CRA”) rulings. These rulings have permitted investors to subscribe for publicly listed FTSs and subsequently to donate such FTSs to a charitable organization or foundation with favourable tax consequences to the investor/donor.

The recent article by David W. Ross in Resource Sector Taxation provided insight into how practitioners have been dealing with specific indemnities in FTS agreements following the decision of the Federal Court of Appeal in The Queen v. JES Investments Ltd.

The purpose of this article is to consider some of the practical problems associated with FTSs and how practitioners have tried to balance the business objectives of a FTS deal with the rules in the Income Tax Act relating to a FTS.

Republished with permission from Federated Press.

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