Flow-Through Limited Partnerships (FTLP):

1. What is my adjusted cost base (ACB) and how do I calculate it?
   
   
2. When will my T5013 tax forms be mailed out?
   
   
3. When do I claim my tax write offs, when and why do I report capital gains?
   
   
4. Where do I claim the deductions on my tax return?
   
   
5. What cash will I be receiving during the life of the partnership?
   
   
6. Why do I continue to get tax information slips after a partnership is wound up?
   
   

1. For details of your adjusted cost base click here.

2. The T5013 tax information slips will be mailed out in the last week of March as natural resource companies are not required to provide us with the tax credits prior to March 31.

3. You claim your tax write-offs in the first year of the Flow-Through Limited Partnership. During the first year, the Limited Partnership invests in flow-through shares of natural resource companies who in turn spend the money on exploration and development. These companies “renounce” the costs associated with this exploration and development to the Limited Partnership, which passes them on to you. You get to claim your portion of these costs on your income tax return in the first year to reduce your income taxes. The cost of the flow-through shares is deemed to be nil for income tax purposes.

 You report capital gains when the Limited Partnership begins to sell the flow-through shares. Since the flow-through shares are deemed to have no cost for income tax purposes, the entire proceeds are capital gains. The Limited Partnership allocates the capital gains to the partners on T5013 income tax slips (REL15 in Quebec). Some of the proceeds from the sale of flow-through shares may be reinvested in new flow-through shares, thus reducing or eliminating the income taxes otherwise payable on the capital gains.

4. If you are preparing your income tax return manually, use Canada Revenue Agency form T1229 and the information from the T5013 slips. The amounts from this form are brought forward to line 224 on your personal income tax return. Form T1229 can be downloaded from the CRA's website.

If you are using current income tax software, it usually takes the credit directly upon entry from the T5013 tax slip, enters it onto the T1229, and claims the credit on line 224. Since claiming the deduction is elective, some software packages may require you to make the claim manually on the T1229 form.

5.  Cash payments are equal to 50% of taxable capital gains less 40% of all deductions as reported on T5013 information slips. These payments are made annually on January 15^th. Cash payments are intended to cover the income tax liability associated with the sale of flow-through shares. The Limited Partnership may attempt to minimize cash payments by reinvesting in further flow-through shares to reduce or eliminate the income tax liability. Cash payments are considered a return of capital for income tax purposes.

6. Initial offering expenses such as selling commission, legal, audit, and certain other costs are deductible over a five-year period regardless of the fact that the Limited Partnership’s life is less than five years.