Tax Information
Frequently Asked Questions on the Flow-Through Limited Partnerships (FTLP)
What is my adjusted cost base (ACB) and how do I calculate it?
Many investors' accountants track the ACBs on behalf of their clients using each year's T5013A slip. Alternatively, you may refer to the ACB calculations provided for recent FTLPs.
Norrep Performance 2010 FTLP click here
Norrep Performance 2009 FTLP click here
Norrep Performance 2008 FTLP click here
Norrep Performance 2007 FTLP click here
For a detailed chart outlining the adjusted cost bases of all FTLPs since 1999 click here.
When will my T5013A tax slip be mailed?
The T5013A slips are generally mailed in the last week of March as resource companies are not required to provide the FTLP with tax information prior to March 31. In a rollover year, the tax slips will be mailed no later than 90 days after the rollover.
When do I claim my tax write offs?
Tax benefits may be deductible over more than one tax year. Investors can often claim a high percentage of the total tax benefit after the first year of the FTLP's operation when it has invested in flow-through shares of natural resource companies. In turn, the companies use the funds from issuing shares to invest in resource exploration and development.
The resource companies renounce or "flow-through" the costs associated with this exploration and development to the FTLP, which in turn passes them on to investors with the T5013A slip. Investors utilize the deduction on their income tax return to reduce income tax payable.
Why are there capital gains to report?
Investors report capital gains when the FTLP sells some of the flow-through shares in the Partnership to prepare for a tax-deferred rollover to a public mutual fund. The Income Tax Act says that the shares held in the FTLP are deemed to have a cost of zero for income tax purposes.
Therefore, when the FTLP sells an investment, the entire proceeds are considered to be capital gains, of which 50% are taxable. The FTLP allocates the capital gains proportionately to the limited partners on T5013A slips.
Where do I claim the deductions on my tax return?
If you are preparing your income tax return manually, use Canada Revenue Agency form T1229 and the information from the T5013A slip. The amounts from this form are brought forward to Line 224 on your personal income tax return. Form T1229 is available on the CRA website.
If you are using income tax preparation software on your computer, the software will often add the credit automatically on Line 224 of Form T1229 once you have entered the data from T5013A slip. As the use of the deduction is optional, investors' software may require them to add the credit manually on the T1229 form in the software.
What cash will I be receiving during the life of the partnership?
Cash distributions are calculated as 50% of the taxable capital gains less 40% of all tax deductions as reported on T5013A slips. Cash is distributed annually on January 15 as well as at the time of the tax-deferred rollover of a FTLP to a public mutual fund.
Cash distributions are intended to cover any income tax liability for the investors that is associated with the sale of investments inside the FTLP. Cash distributions are considered a return of capital for income tax purposes and are not taxable.
Why do I receive a tax information letter at rollover in addition to the T5013A slip?
Initial offering expenses such as selling commission, legal, and audit are deductible over a five-year period. The life of a FTLP is often less than five years. Therefore, investors will often receive a letter at the time of rollover notifying them of deductions that can be taken in future years after the FTLP has ceased to legally exist due to the rollover to a public mutual fund.
Who do I contact for more information?
For more information, please contact us.