Corporate client invested in flow-through shares in 2022. In the 2024 year, the client received a T101. There is an amount in box 120 (Canadian Exploration Expenses renunciated) and box 128 (Mineral Exploration tax Credit ITC). Box 128 applies only to individuals since only individuals can claim an investment tax credit on these shares. But, I’d like to claim the expense and create a loss carry-forward as the client will show a profit in the future. Where/how do I claim this on the T2? I looked at schedule 12, but that seems to apply to the company incurring the expenses. The mining company renounces its right to claim the expenses, allowing its investors to claim their portion, up to the amount invested.
@jhd.hemeon For a corporate investor in the FTSs, you can report in Schedule 12 as other addition (box 220) in Part 4. As long as the investor corporation is not a “principal-business corporation” (ie. in general terms, a corporation in the business of mining or exploring for minerals), it should be able to claim CEE to create a non-capital loss.
Steven
Thanks, I had considered schedule 12, but the wording and classifications led me to think this form is meant for the actual mining company, not its investors in flow-through shares. If I use box 220, and I already have a loss, I’m forced to claim $0 and carry it forward. Something like CCA on a rental property on a personal return. Can only be used to reduce rental income to zero. I very rarely create a T2 without importing from CaseWare. I used GIFI 8411 - Exploration expenses, and it caused no warnings in TaxCycle. So, I think I’ll go with that. There’s little to no guidance on CRA or the larger CPA firms on the mechanics of claiming renounced exploration expenses for a corp. It’s mostly aimed at individuals. They can write off these expenses up to the extent of their investment, plus they can claim the investment tax credit. In my client’s case, they had a $10,000 investment in flow-through shares plus a $5,000 investment in rights to buy non-flow-through shares. The renounced expenses per the T101 was $11,000, so the maximum claim is $10,000 and the investment is zero. Also, the rights expired, so there’s a capital loss on the $5,000 investment in rights. I’ll file as is, and see if there are any repercussions.
On another topic, I’ve noticed corporate assessments & reassessments are going through almost instantly. Also, HST adjustments and transfers between periods. The other night/morning, I adjusted a client’s HST return from 2 periods ago. The reassessment was instant, showing a credit in that period. I then filled in the form to ask for a transfer to the current perion, went to great lengths to explain the reasons, and, before I could submit the request, it had already been done. I guess if a request isn’t flagged for human intervention, their computer system does what is requested. On the personal side, however, T1 adjustments are slower than cold molasses running uphill.