The Ontario government offers an Ontario focused flow-through tax credit (OFFTS) to stimulate mineral exploration in Ontario and provide mining companies with increased access to financial resources. This credit is meant to encourage Ontarians to invest in companies that are performing environmental projects and exploring for minerals.
Expenses incurred by those investing into the program can be claimed as a refundable tax credit and used to pay less income tax in Ontario than they would have otherwise.
Below, you'll find a detailed guide to this credit program to help you understand how it can benefit you and other Ontarians.
Key Takeaways
- You can claim the Ontario focused flow-through tax credit if you purchase flow-through shares in a mining company.
- The OFFTS credit is used to offset the cost of environmental projects and mining exploration.
- The purpose of this credit is to support small mining companies in Ontario.
- To be eligible for the credit, you must have lived in Ontario during the recent tax year and purchase the shares from an Ontario-based company.
How does the Ontario focused flow-through tax credit work?
The Ontario focused flow-through tax credit is a tax credit available for those who have purchased flow-through shares, meaning they have invested money in flow-through companies.
Under the Ontario focused flow-through share tax credit program, flow-through shares are investments made into companies that agree to spend that money on environmental projects and mining exploration in Ontario.
Investors purchase shares from these companies, which is the equivalent of partial ownership stake. When the company begins its mining or exploration work, it can transfer its expenses over to the shareholder.
The credit enables shareholders to claim 5% of the exploration expenses passed along to them by the company as a credit on their annual tax return.
Did you know? The Ontario focused flow-through share tax credit has helped offset more than $4.3 billion in mining costs since 2011.
What are the Ontario focused flow-through tax credit eligibility requirements?
Anyone who purchased flow-through shares is eligible for this tax credit if they meet these criteria:
- Lived in Ontario on the last day of the tax year they’re filing for
- Purchased the flow-through shares after October 17, 2000
- Purchased the flow-through shares from a corporation that's permanently based in the province of Ontario
Eligible expenses for the tax credit must be related to mining exploration, including studies or consultations, prospecting, surveys, drilling, labour, and more.
For a full list of eligible and ineligible expenses, see: Expenses.
Are there other flow-through share tax credits in Canada?
The Ontario focused flow-through share tax credit is not the only flow-through tax credit available in Canada. British Columbia also has a non-refundable B.C. Mining flow-through share income tax credit, where residents can claim 20% of expenses.
The federal government has a program called the Mineral Exploration Tax Credit (METC), which allows taxpayers to claim 15% of eligible expenses.
Here are other programs that encourage Canadians to support local mineral exploration.
- B.C. mining exploration tax credit for personal income tax
- Manitoba mineral exploration tax credit
- Saskatchewan mineral exploration tax credit
FAQ
How much can I get from the Ontario focused flow-through tax credit?
You can claim 5% of your share of the exploration expenses incurred by the flow-through company that you invested in – the amount you receive depends on the number of shares you purchased and the amount you paid for the shares.
How do I apply for the Ontario focused flow-through tax credit?
As long as you meet the eligibility requirements, you can apply for this credit when you file your tax return. You'll also be required to complete the Ontario Credits and the T1221 Ontario Focused Flow-Through Share Resource Expenses form.
Does the Ontario focused flow-through tax credit expire?
At the time of writing, there's no expiration date or expected expiration date for this tax credit program. If you didn't receive the credit you're entitled to or received less than expected, contact CRA to file a formal objection.
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