Frequently Asked Questions
Need more information? Browse the FAQs below.
Preserving wealth by saving taxes.
A Terra LP invests in a diversified portfolio of publicly traded resource firms. The fund provides favourable tax deductions and tax credits for reducing income taxes and aims to produce attractive returns.
This downloadable PDF explains in detail how a Terra flow-through limited partnership actuall works.
A Terra LP is a proven tax planning tool for reducing income taxes and building wealth. Specific attributes of a Terra LP include low cost, investment in public Super Flow-Through shares, expert portfolio management and early rollover/maturity.
Advantages of a Terra LP
Yes, the targeted rollover date for the 2021 LP is June 2022 or sooner, which is significantly shorter than most other flow-through limited partnerships that have a life span of 2 years or more.
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. As a result, they quickly increase in value as the share price of the company in question rises. This can have a significant positive effect on the performance of the fund.
Terra offers a true F Class that does not pay a sales commission, unlike many competing flow-through offerings, which pay between 2.25% & 2.50%. Terra F Class is ideal for “managed”, “wrap” or “fee only” accounts
Track Record & Performance
Since inception in 2005 Terra has offered 22 LPs; provided investors over $285 million in tax benefits; made over 565 investments in mining and other resource companies; and matured on average in less than 10 months.
Terra flow-through LP’s have outperformed. 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, SK, MB, NS) 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, 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 advisor to ensure suitability requirements are met. For advisors, please see our new automated online subscription agreement, Quick Fill Subscription.
Tax Deductions, Credits & Other Benefits
The LP provides tax deductions & credits of over 100% in the 1st year and up to 130% over the life of the partnership. Additionally, the partnership provides provincial tax credits for residents in BC, Saskatchewan, Manitoba and Ontario for qualified mining investments.
Yes a Terra LP invests in a portfolio of primarily Super Flow-Through shares of public mining firms, which provide federal and provincial tax credits for qualified mining investments.
We make it simple for you to see the tax savings for a given level of income (by province) and how to maximize those savings. See our Tax Savings Calculator.
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.
Investment & Rollover Details
The minimum investment is $2,500 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, or up to $100,000 if they receive suitability advice. There are no investment limits for BC investors or eligible investors in MB.
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.
The Net Asset Value (NAV) can best be described as the intrinsic value. The NAV of the 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 Fund by the number of outstanding units
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 Ernst & Young LLP.
The targeted rollover / maturity date is June of the next calendar year.
Rollover / maturity automatically occurs without requiring any action on the part of the investor. Investors receive corporate class 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/.
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. See our Tax Savings Calculator.
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 received and further reduces the net cash outlay. 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 5.95% and compensates advisors for providing tax and investment advice related to a Terra LP investment. The commission is paid by the partnership and is tax deductible.
No load Class F units, do not charge a sales commission and are available for direct purchase or through advisors offering “managed”, “wrap” or “fee only” accounts.
Risk is managed in several ways including:
- the portfolio is diversified and invested in approximately 25 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 net cash outlay to approximately 40% of the initial investment which provides a “cushion” against losses. In other words, the investment can decline approximately 50% before a loss is incurred. For more information about the net cash outlay, and break-even see our Tax Savings Break-even Summary.
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't access your funds other than to provide trade instructions or charge our management fee. Our custodian, National Bank Independent Network (formerly NBCN) is backed by the financial strength and ongoing support of National Bank of Canada.