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Calculation of the tax consequences of a DONATION
OF CGE RESOURCES FLOW-THROUGH SHARES
québec
Stage 1: Calculation of the tax consequences for the limited partners of the Purchase of Mining Flow-Through Shares by the Partnership as of June, 2009.
|
|
Per Unit |
Per Minimum Subscription |
|
investment |
$1,000.00 |
$5,000.00 |
|
Deduction for Canadian Exploration Expenses (Federal and Québec) (85%)* |
850,00 |
4 250,00 |
|
Additional deduction of 25% for exploration expenses incurred in Québec (Québec) |
212,50 |
1 062,50 |
|
Additional deductions of 25% for surface mineral exploration expenses (Québec) |
212,50 |
1 062,50 |
|
Total deductions |
1 275,00 |
6 375,00 |
|
Net tax advantages attributable to deductions |
|
|
|
Federal (24.22% x $850 & $4,250) |
205,87 |
1 029,35 |
|
Québec (24% x $1,275 & $6,375) |
306,00 |
1 530,00 |
|
|
|
|
|
Tax credit of 15% for mining exploration relates to flow-through shares (Federal) |
127,50 |
637,50 |
|
|
|
|
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Tax Savings |
$639,37 |
$3 196,85 |
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* The tax savings are based upon the premise that at least 85% of the amount invested will be expensed on CEE.
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Stage 2: Calculation of the tax consequences of a donation of the flow-through shares per of $1,000 unit.
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Donation* |
$850.00 |
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|
|
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Credit for donation ** |
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|
Federal |
$182.45 |
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Québec |
$170.00 |
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Donation tax credit |
$352.45 |
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* Assumes a donation of flow-through shares having a market value of $850.
** The Tax Credit formula for donations under the Act provides for a rate of 12.525% for the first $200 of the donation including Québec abatement and a rate of 24.215% for the portion exceeding $200. In Québec, the Tax Credit is 20% of the first $2,000 of donation and 24% of the excess.
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Stage 3: Cumulative tax advantages of a donation of CGE Resources flow-through shares of $850
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Tax Advantages from Mining Exploration (Stage 1) |
$639.37 |
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Tax Advantages of a donation (Stage 2) |
$352.45 |
|
TOTAL ADVANTAGES |
$991.82 |
Accordingly, limited partners may only effect a donation of flow-through shares should the limited partners have elected to distribute the assets of the Partnership on a prorata basis to the limited partners in accordance with option (1) in the previous heading or have authorized the General Partner to proceed with the liquidation of the assets of the Partnership in accordance with option (2) above, all the while permitting the limited partners who wish to make a donation to obtain their prorata share of the flow-through shares of the Partnership prior to liquidation.
ONTARIO
Stage 1: Calculation of the tax consequences for the limited partners of the Purchase of Mining Flow-Through Shares by the Partnership
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|
|
|
|
Per Unit |
Per Minimum Subscription |
|
|
|
|
Investment |
$1 000.00 |
$5,000.00 |
|
Deduction for Canadian Exploration Expenses (Federal and Ontario) (85%)* |
850.00 |
4,250.00 |
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Total deductions |
850.00 |
4,250.00 |
|
Net tax advantages attributable to deductions |
|
|
|
Federal (24.22% x $850 & $4,250) |
246.50 |
1,232.50 |
|
Ontario (11.16% x $850 & $4,250) |
94.86 |
474.30 |
| Ontario surtaxe (56% X Ontario tax amount) |
53.12 |
265.61 |
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Ontario focussed flow-through share tax credit of 5% |
42.50 |
212.50 |
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Tax credit of 15% for mining exploration relates to flow-through shares (Federal)
|
127.50 |
637.50
|
|
Tax Savings |
$564.48 |
$2,822.41 |
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Assuming that all mining exploration expenses are incurred in Ontario.
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Stage 2: Calculation of the tax consequences of a donation of CGE Resources flow-through shares per unit of $1,000
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Donation* |
$850.00 |
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|
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Credit for donation ** |
|
|
Federal |
$218.50 |
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Ontario |
$84.64 |
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Donation tax credit |
$303.14 |
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* Assumes a donation of flow-through shares having a market value of $850.
** In Ontario, the federal tax credit is 15% for the first $200 and 29% for the excess. The Ontario tax credit is 6.05% for the first $200 and 11.16% for the excess. |
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Stage 3: Cumulative tax advantages of a donation of CGE Resources flow-through shares of $850
|
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Tax Advantages from Mining Exploration (Stage 1) |
$564.48 |
|
Tax Advantages of a donation (Stage 2) |
$303.14 |
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TOTAL ADVANTAGES |
$867.62 |
Accordingly, limited partners may only effect a donation of flow-through shares should the limited partners have elected to distribute the assets of the Partnership on a prorated basis to the limited partners in accordance with option (1) in the previous heading or have authorized the General Partner to proceed with the liquidation of the assets of the Partnership in accordance with option (2) above, all the while permitting the limited partners who wish to make a donation to obtain their prorated share of the flow-through shares of the Partnership prior to liquidation.
ALBERTA
Stage 1: Calculation of the tax consequences for the limited partners of the Purchase of Mining Flow-Through Shares by the Partnership
|
|
Per Unit |
Per Minimum Subscription |
|
|
|
|
Investment |
$1,000.00 |
$5,000.00 |
|
Deduction for Canadian Exploration Expenses (Federal and Alberta) |
850.00 |
4,250.00 |
|
|
|
|
|
|
|
|
|
Total deductions |
850.00 |
4,250.00 |
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Net tax advantages attributable to deductions |
|
|
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Federal (29% x $850 & $4,250) |
246.50 |
1,232.50 |
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Alberta (10% x $850 & $4,250) |
85.00 |
425.00 |
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|
|
|
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Tax credit of 15% for mining exploration relates to flow-through shares (Federal) |
127.50 |
637.50 |
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|
|
|
Tax Savings |
$459 |
$2,295 |
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|
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Stage 2: Calculation of the tax consequences of a donation of flow-through shares per unit of $1,000
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|
Donation* |
$850.00 |
|
|
|
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Credit for donation ** |
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|
Federal |
$218.50 |
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Alberta |
$162.00 |
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Donation tax credit |
$380.50 |
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Stage 3: Cumulative tax advantages of a donation of CGE Resources flow-through shares of $850
|
|
Tax Advantages from Mining Exploration (Stage 1) |
$459.00 |
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Tax Advantages of a donation (Stage 2) |
$380.50 |
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TOTAL ADVANTAGES |
$839.50 |
* Assumes a donation of flow-through shares having a market value of $850.
** In Alberta, the federal tax credit is 15% for the first $200 and 29.1% for the excess. The Alberta tax credit is 12.75% for the first $200 and 21% for the excess.
Accordingly, limited partners may only effect a donation of flow-through shares should the limited partners have elected to distribute the assets of the Partnership on a prorata basis to the limited partners in accordance with option (1) in the previous heading or have authorized the General Partner to proceed with the liquidation of the assets of the Partnership in accordance with option (2) above, all the while permitting the limited partners who wish to make a donation to obtain their prorata share of the flow-through shares of the Partnership prior to liquidation.
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