Principal Issues: Can CEE be renounced under a unit flow-through share agreement in respect of the portion of the subscription price allocated to a warrant to acquire a share that is not a flow-through share under both the current and proposed definitions of "flow-through share" in subsection 66(15)?
Position: See below.
Reasons: See below.
2010 CTF Conference November 28, 2010
Flow-through Shares
Question 19
Does the CRA consider that Canadian exploration expenses (CEE) can be renounced under a unit flow-through share agreement in respect of the portion of the subscription price allocated to a warrant to acquire a share that is not a flow-through share under both the current and proposed definitions of "flow-through share" in subsection 66(15)?
Response 19
It is the CRA's position that CEE can be renounced only in respect of the portion of the subscription price allocated to a warrant which represents a right to acquire a share that would be a flow-through share. Pursuant to paragraph (b) of both the current and proposed definitions of "flow-through share," the amount of resource expenses that may be renounced under the agreement cannot exceed the amount of consideration received by the corporation for the flow-through share or the right to acquire the flow-through share, as the case may be.
Ted Harris
2010-038434