Flow Through Limited Partnerships
Overview
Flow-through Limited Partnerships are actively managed portfolios of “flow-through” shares and provide investors a tax-assisted opportunity to invest in junior resource companies. By investing in one or more of the CMP® or Canada Dominion Resources™ Limited Partnerships, Canadian investors gain access to the professional management and expertise of Goodman & Company’s portfolio management team as well as significant tax benefits.
While flow-through shares are the same as any other common share of a Canadian resource company, they are unique in that qualifying exploration and development expenses may be “flowed-through” to investors of the flow-through shares. The result is that qualifying, tax-deductible expenses incurred by the resource company effectively become tax deductible expenses of the “flow-through” share investor.
When held in a flow-through limited partnership, the tax benefits of flow-through shares are passed on to limited partners.
CMP®
CMP® Resource Limited Partnerships are designed to transfer the tax benefits enjoyed by resource companies to individual investors through a diversified, professionally managed portfolio of CEE-eligible company flow-through shares that meet strict criteria.
The resource experts and portfolio managers at Goodman & Company, Investment Counsel Inc. carefully create and maintain a portfolio containing equity securities of qualifying resource companies. Our size and success have strengthened our negotiating positions. By limiting the number of companies we invest in, we keep ourselves in a better position to negotiate lower premiums and potentially provide greater returns. Typically, a year and a half following the date that the first tax deduction is allocated, investors can receive their CMP® shares in liquid investments through a tax-efficient rollover into a mutual fund, currently the DMP Resource Class, part of Dynamic Managed Portfolios Ltd., which is sub-advised by Goodman & Company, Investment Counsel Inc.
History
CMP® pioneered the creation of flow-through limited partnerships in the 1980s and, ever since, the CMP® Resource Limited Partnerships have offered investors nationwide the opportunity to benefit from Canada’s compelling tax incentives aimed at supporting our national resource industry. Since their creation in 1984, the CMP® Resources Limited Partnerships have raised more than $2.9 billion and have negotiated more private placements than any other flow-through partnership in Canada.
CMP® began as a vehicle to transfer the tax benefits enjoyed by resource companies to the larger investment community. In 1983, the Federal government offered particular tax advantages to resource companies under the Canadian Exploration Expenditure (CEE) program. This allowed resource companies that incur certain exploration expenditures in Canada to completely deduct these costs from their income for tax purposes. This tax assistance was designed to encourage exploration and development within the oil and gas, mining and base metals sectors.
Ned Goodman and Richard J. Renaud recognized how the tax assistance could benefit investors and successfully canvassed the Canadian Federal government for a flow-through investment vehicle. By creating flow-through shares, an issuance of special shares allows companies in the target resource sectors to pass on the special write-offs to investors. The exploration expenditures were then flowed through to CMP® Resource limited partners using what is now called a “flow-through share”.
Since 1999, CMP® Resource Limited Partnerships have raised more than $1.7 billion for Canadian resource projects and over $2.9 billion since their creation in 1984. The partnerships have provided investors with more than 100 percent tax efficiency. In addition to the tax advantages, the average portfolio returns of the CMP® Resource Limited Partnerships provide another compelling investment advantage.
Tax Information
The following provides tax related information our investors often request with respect to their investment in the Flow-Through Limited Partnerships. As such the following is not intended to be, and should not be construed to be, tax advice to any particular investor. Investors should consult with their own investment advisor or tax consultant to determine the tax consequences to them of a Flow-Through Limited Partnership.
