These incentives are offered through limited partnerships, joint ventures, flow-through shares and royalty trust units. Through such vehicles, individuals may be eligible to deduct specific exploration expenses and other resource-related incentives. Joint ventures are similar to limited partnerships except that at-risk rules do not apply. Partnerships and joint ventures may also be eligible for additional tax benefits in the form of Alberta royalty tax credits and provincial crown royalty tax rebate programs. Flow-through shares allow issuing companies to renounce certain deductions in favor of the investor.
Provincial rules vary by province.
Also, before redeeming your units, be sure and check the terms under the prospectus of the fund you purchased, as redemption fees imposed by the fund company may apply as well. The initially acquired shares are priced at a premium to market value so the company can participate in the tax savings. Investor deductions generally reduce the cost base of the shares to zero, resulting in a capital gain equal to the entire proceeds when the shares are sold. Income tax on the returns of investments held within the accumulation fund are deferred until withdrawals are made from the policy. Furthermore, UL can be used to fund retirement needs.