Frequently Asked Questions
Need more information? Browse the FAQs below.
About Terra
Preserving wealth by reducing taxes.
A Terra LP invests in a diversified portfolio of Super Flow-Through shares of publicly traded mining firms. The fund provides favourable government endorsed tax deductions and tax credits (including the new 30% critical mineral exploration tax credit) for reducing income taxes and also seeks to provide additional investment returns.
This downloadable PDF explains in detail how a Terra flow-through limited partnership works.
A Terra LP is a proven tax planning tool, which provides government endorsed tax deductions & tax credits (including the new 30% critical mineral tax credit) for reducing income taxes. For more information, see Tax Savings.
Specific attributes of a Terra LP include low cost, a diversified portfolio of critical mineral (cobalt, copper, lithium, nickel, uranium, zinc) and precious mineral (gold, silver) investments, expert portfolio management and early rollover/maturity. Terra LPs have also performed well. See Past Performance.
Advantages of a Terra LP
Yes a Terra LP invests in a portfolio of "super" flow-through shares of public mining firms, which provide: (1) Canadian exploration expenses (CEE); and either (2) the 15% mineral exploration tax credit (METC) or the new 30% critical mineral exploration tax credit (CMETC); and (3) additional provincial tax credits (BC, SK, MB, ON) or provincial tax deductions (QC) for qualified investments.
Flow-through investments qualifying for additional mining tax credits were commonly referred to as “super” flow-through shares to distinguish them from oil & gas flow-through shares, which provided CEE deductions but no additional tax credits. Budget 2022 announced the elimination of oil & gas flow-through shares, which are no longer available after March 31, 2023.
Yes, a Terra LP has targeted to invest 50% of its portfolio in Super flow-through shares that qualify for the new 30% critical mineral exploration tax credit (CMETC). Critical mineral investments include cobalt, copper, lithium, nickel, uranium, zinc etc., which are important for the transition to battery technology used in zero emission vehicles and other clean energy solutions.
Yes, the targeted rollover / maturity date is June of the next calendar year.
Yes, Terra LP's invest in 100% public Super Flow-Through & Flow-Through shares as compared to competing funds whose portfolios must only invest 80% of investable funds in public resource companies.
Yes, many of the flow-through investments acquired by a Terra LP also provide warrants, which gives the LP the right to purchase additional shares at an attractive pre-determined price.
Warrants are typically exercisable for 2 to 3 years and quickly increase in value as the share price of the company rises. This increase can have a significant positive effect on the performance of the fund.
Yes Terra LPs offer F Class, which is ideal for “managed”, “wrap” or “fee only” accounts
Track Record & Performance
Since inception in 2005 Terra has offered 25 flow-through lp's; invested in more than 700 flow-through issues for over 6,000 investors; and provided on average, liquidity in less than 6 months.
Terra flow-through LP’s have outperformed. Since 2015 the average after-tax return on capital at risk is approximately 45% for an Ontario resident taxed at the highest marginal rate. See Past Performance.
Who Can Purchase?
Canadian residents who are individuals and are of the age of majority in their province or territory can invest in a Terra LP, so long as they qualify as an accredited investor (all provinces) or eligible investor (AB) or reside in BC. Additionally, an investor who is not an individual and subscribes for not less than $150,000 may also purchase.
Yes, corporations (including CCPCs), partnerships, trusts and certain other organizations may invest in a Terra LP if they qualify as an accredited investor or eligible investor or invest $150,000 or more.
We recommend investors purchase through their registered dealer / advisor to ensure suitability requirements are met. For registered advisors, please see our new automated online subscription agreement, Quick Fill Subscription.
Tax Deductions, Tax Credits, Capital Losses & Other Benefits
For a $10,000 investment, individuals can reduce 2024 taxes between $6,537 and $7,475, which includes federal and provincial tax credits.
For more information about the tax deductions and tax credits available, see Tax Savings.
Yes. A taxable capital gain occurs when a Terra LP investment is sold, transferred or donated and this gain can be reduced if an investor has unclaimed capital losses available.
Capital losses are deductible generally only against capital gains. Any excess of allowable capital losses over taxable capital gains from the flow-through investment can be carried back three years and forward indefinitely.
To see the benefit of untilizing available capital losses use our Tax Savings Calculator.
Yes our Tax Savings Calculator makes it simple for you to see the tax savings for a given level of income (by province) and how to maximize those savings.
Resource investments have long been of interest to investors due to two important benefits: diversification and inflation protection. With resource sector valuations at cyclical lows there is also the potential for significant investment gains through commodity price appreciation.
Also, with the introduction of the new 30% critical mineral exploration tax credit (CMETC), the federal government is encouraging the exploration, development and supply of minerals required for the transition to clean energy.
Alternative minimum tax (AMT) is a parallel calculation to the regular income tax calculation that allows a basic exemption ($173,205 in 2024) but fewer other deductions and exemptions to arrive at adjusted taxable income. AMT ensures individuals, including certain trusts, with high gross income, pay at least a minimum federal tax rate of 20.5% on their adjusted taxable income amount for the year. AMT is more likely to be triggered for large flow-through share and limited partnership investments, which may allow an investor to take disproportionately high deductions.
AMT results in a pre-payment of tax. Your actual cost of AMT is generally the opportunity cost of the pre-paid taxes, assuming you can recover the AMT paid within the carryover years. AMT paid in one taxation year can be used over the following 7 years to reduce the portion of your regular federal tax liability that is over the AMT amount calculated for that future year, until it is used up. There is no AMT carry-back permitted to prior years.
Investment & Rollover Details
The minimum investment is $5,000 and larger purchases are in increments of $100 over the minimum amount.
There are no investment limits for accredited investors in any province. Eligible investors in the provinces of AB, SK and NS can invest up to $30,000 if they meet certain requirements, or up to $100,000 if they receive suitability advice. There are no investment limits for BC investors. Investors should also speak to their tax advisor to ensure they are not subject to alternative minimum tax, which can happen if the amount invested is too large and provides too many tax deductions.
Investors receive a T5013 federal tax receipt (or RL 15 tax receipt for Québec residents) on or about March 31 of the following year. This tax receipt shows the tax deductions, tax credits and other expenses that may be claimed by the investor on their tax return for reducing taxes.
Tax deductions are used to lower your taxable income, while tax credits are subtracted from the amount you owe.
Tax deductions are expenses, which are subtracted from gross income to calculate taxable income. The actual amount investors save with deductions depends on their personal tax rates. For example, if you pay tax at the highest marginal rate of 53.5%, one dollar of tax deduction has 53.5 cents of “cash value” to you.
Tax credits are amounts subtracted from taxes owed. Tax credits reduce taxes payable to the same extent for all taxpayers, regardless of their income level and marginal tax rate. A dollar of tax credit has a dollar of “cash value” to you.
Investors recoup the majority of their investment through tax savings, which reduces their net cost, similar to a repayment of capital. The “break-even value” is the amount required on redemption such that, after paying capital gains tax, the investor recoups the net cost of their investment.
For more information, see our summary: Tax Savings & Break-even for Individual Investors.
The Net Asset Value (NAV) of the LP or Fund is the value of all investments and cash of the Fund, less the costs and the management fee, but before deduction of any performance fee. The NAV per share is calculated by dividing the NAV of the LP/Fund by the number of outstanding units/shares.
The NAV is calculated independently by our administrator, SGGG Fund Services Inc., which provides this service to hundreds of investment funds. In addition, the financials are audited annually by KPMG LLP.
Once the LP has finished raising funds monthly market pricing is available on our website at Terra NAV or third party reporting websites, including globefund.com.
The targeted rollover / maturity date is June of the next calendar year.
The rollover automatically occurs without requiring any action on the part of the investor. Investors receive corporate class mutual fund shares, which may be sold or reinvested, transferred to an RRSP or donated for additional tax savings. The shares can also be contributed to a regular investment account or TFSA, but no additional tax savings will result.
Yes any sale, transfer, donation or redemption will trigger a capital gain. The resulting capital gain is equal to the difference between the proceeds received and the adjusted cost base (ACB) and this difference is taxed at the investors’ capital gains tax rate. The ACB is posted on this website or can be obtained here: https://terrafunds.ca/nav-acb/.
The capital gains inclusion rate for individuals is 50% on the first $250,000 of annual gains and 66.7% of annual gains over $250,000 and for corporations 66.7% of annual capital gains on or after June 25, 2024.
RRSP Transfers & Donations
Yes, on maturity your investment in a Terra LP may be transferred to your RRSP or donated to charity for additional tax savings.
Yes, if you have capital losses to utilize. Any capital losses available can be applied to reduce or eliminate capital gains tax owing, which increases the tax savings and rate of return. For more information, see our Tax Savings Calculator.
Fees & Costs
The management fee is 2%.
The performance bonus is 20% of any gain over the starting $100 per Unit value on the rollover valuation date.
No, Terra LPs do not pay trailer or service fees.
Class A units pay a sales commission of up to 5.75% and compensates advisors for providing tax and investment advice related to a Terra LP investment. Class F units charge a 2.25% fee to compensate dealers for administration and compliance costs incurred. The commission/fee is paid by the partnership and is tax deductible.
Class F units are available through registered dealers / advisors offering “managed”, “wrap” or “fee only” accounts.
Risk Management
Risk is managed in several ways including:
- the portfolio is diversified and invested in approximately 30 public companies. To learn more about the investment portfolio, see How We Build Portfolios;
- the investments are managed by an expert investment team who actively manage the portfolio. For more information, see Investment Team; and
- investor’s receive attractive tax savings which typically lowers their break-even to approximately 45% of the initial investment, which provides a “cushion” against losses. In other words, the investment can decline approximately 55% before a loss is incurred. For more information about the break-even value see our summary: Tax Savings & Break-even for Individual Investors.
Safety and security are very important to our business and we use several procedural controls to protect your account including:
- Bank-level encryption protects your data. Our 128-bit SSL certificate encrypts all information transmitted between your computer and our web servers, protecting your password and account details.
- We use a third-party custodian to hold your assets. Terra can not access your funds other than to provide trade instructions or charge our management fee. The custodian for Terra LPs is Canadian Western Trust Company.