Flow Through Tax Sheltering
In this arrangement, the tax benefits associated with certain expenses, such as exploration or development costs, are "flowed through" to investors in the project.
Flow-through tax sheltering is a tax planning strategy commonly used in resource-based investments, such as oil and gas or mining ventures. In this arrangement, the tax benefits associated with certain expenses, such as exploration or development costs, are "flowed through" to investors in the project. Instead of the company claiming these expenses as deductions, they are passed on to individual investors, who can then offset their taxable income with these deductions. Flow-through tax sheltering allows investors to reduce their tax liability by deducting exploration or development expenses associated with the investment from their taxable income. However, it's important for investors to understand the risks associated with these investments and consult with tax professionals to ensure compliance with tax laws.
