Flow-through share issuers — File based on proposed extensions

Flow-through share issuers — File based on extensions

The CRA says taxpayers can file their returns in accordance with proposed amendments


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In a recent technical interpretation, the CRA confirms that junior mining exploration companies and other flow-through share issuers can file their tax returns based on recent draft legislation for the proposed 12-month extension to spend the capital they raise via flow-through shares (TI 2020-0874621E5). These proposed changes, which include Part XII.6 tax relief and consequential reporting and payment deadline changes, were included in draft legislation released on December 16, 2020, and have not yet been included in a bill.

The CRA's welcome confirmation is consistent with its long-standing position that generally encourages taxpayers to file their tax returns based on proposed legislation.


Finance recently published draft legislation that temporarily gives eligible mining companies and other flow-through issuers 36 months (up from 24 months) to incur eligible flow-through share expenses, under the general rule. This extension applies to flow-through share agreements that an eligible company entered into after February 2018 and before 2021. The draft legislation also provides flow-through share issuers an additional 12 months to incur eligible renounced expenses under the look-back rule, for agreements entered into in 2019 or 2020. The draft legislation also provides some relief for Part XII.6 tax, which generally applies to eligible Canadian exploration expenses that are renounced before they are incurred under the look-back rule, by deeming expenses to be incurred up to 12 months earlier than the date they are actually incurred for agreements entered into in 2019 or 2020. The draft legislation also makes consequential changes to reporting and payment deadlines to reflect the temporary extensions and Part XII.6 tax relief.

For example, under the draft legislation, a corporation that issued flow-through shares in 2019 under the look-back rule has an additional year (until before March 2022, instead of before March 2021) to file Form T101C, "Part XII.6 Tax Return" to report any Part XII.6 taxes payable for 2020. Finance first announced its intention to make these changes in July 2020, in response to the COVID-19 pandemic.


At issue in this TI is whether taxpayers can file their returns based on the proposed amendments that have not yet been enacted.

CRA view

In this TI, the CRA confirms that eligible taxpayers may file their tax returns, including Form T101C, in accordance with the draft legislation, even though it has not yet been enacted.

The CRA refers to its long-standing practice to ask taxpayers to file on the basis of proposed legislation, except in cases where the proposed legislation results in an increase in benefits to the taxpayer or where there is a significant rebate or refund at stake. In those cases, the CRA's general practice is to wait until the measures are enacted.

The CRA also notes that if the government announces that a particular proposed amendment will not ultimately be enacted, it will generally waive any penalties or interest for taxpayers who filed based on the proposed amendments and took immediate steps to address the change and pay any applicable taxes.

For more information, contact your KPMG advisor.

Information is current to January 12, 2021. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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