IDEAS home Printed from https://ideas.repec.org/p/qed/dpaper/70.html
   My bibliography  Save this paper

Cost-Effectiveness Of After-Tax Financing: Flow-Through Shares In Canada

Author

Listed:
  • Glenn Jenkins

    (Queen's University, Kingston, On, Canada)

Abstract

This paper evaluates the efficiency of flow-through shares as an after-tax financing instrument. This instrument was designed to assist non-taxable mining and petroleum companies in benefiting from various tax incentives given to these sectors. Efficiency is measured here as the ratio of the present value of the incremental loss in tax revenues incurred by the government, to increase in the present value of the tax benefits received by the corporations that issue flow-through shares. From this analysis, it is clear that the government could reduce its waste of tax revenues substantially through the design of a more efficient system of getting cash in the hands of non-taxable operating companies, in exchange for the companies giving up their tax deductions. The increased use of direct refundability for such tax deductions is an obvious alternative. There are indications from this study that a rate of direct tax refundability substantially lower than the normal value of these tax deductions to a fully-taxable firm would be more advantageous to most non-taxable firms than the use of flow-through shares.

Suggested Citation

  • Glenn Jenkins, 1987. "Cost-Effectiveness Of After-Tax Financing: Flow-Through Shares In Canada," Development Discussion Papers 1987-01, JDI Executive Programs.
  • Handle: RePEc:qed:dpaper:70
    as

    Download full text from publisher

    File URL: https://cri-world.com/publications/qed_dp_70.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tedds, Lindsay M., 2017. "The Tax Treatment of Non-Renewable Resource Exploration Expenditures in Canada: A Historical Review and a Way Forward," MPRA Paper 96912, University Library of Munich, Germany, revised 17 Dec 2017.

    More about this item

    Keywords

    after-tax financing; flow-through shares; Canada;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:qed:dpaper:70. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mark Babcock (email available below). General contact details of provider: https://edirc.repec.org/data/qedquca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.